Pound Sterling Loses Momentum as Yen Strengthens
The Pound Sterling has lost its momentum after last week's late rally, with Tuesday's session opening on a less convincing note. The latest UK data was not disastrous but sufficient to cool down the bullish sentiment. The revision of UK manufacturing growth in July to a four-month low indicates that higher energy costs, weaker demand, and supply disruptions are starting to take their toll.
The Pound's three-day advance against the US Dollar stalled on Monday, while the Japanese Yen has seen a sharp recovery, changing the tone across major currency markets. The FX market remains pulled between two forces: intervention-backed Yen strength and renewed uncertainty over the US-Iran conflict.
Oil prices have rebounded after Monday's sell-off, Asian shares are softer, and Japan's latest bond auction has reminded traders that the Yen story is now about both currency intervention and bond-market pressure. The broader backdrop still favors high-beta commodity currencies when risk appetite improves and US rate pressure eases.