Finance
Sterling slips against dollar, gains on both euro and yen
Published by Global Banking & Finance Review®
Posted on October 7, 2025
3 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on October 7, 2025
3 min readLast updated: January 21, 2026
Sterling slips against the dollar but gains on the euro and yen amid political events in Japan and France. The Bank of England's upcoming speeches may influence future trends.
(Reuters) -The British pound dipped against the dollar on Tuesday but gained slightly against the euro and yen, which remained under pressure due to political uncertainty and fiscal concerns in France and Japan.
Sterling was down 0.3% against the dollar at $1.3441, but remains within its recent range.
"It's quiet for sterling at the moment," said Mohamad Al-Saraf, forex research associate at Danske Bank, who noted that attention in the currency market was largely elsewhere.
"We are awaiting a new catalyst, so we could see some range trading in the near term," he added.
POUND CATALYSTS
Bank of England chief economist Huw Pill is scheduled to speak tomorrow, and fellow rate-setter Catherine Mann is speaking on Thursday. Both Pill and Mann voted with the majority to keep interest rates unchanged at the last BoE meeting in September.
Money market traders are pricing in under three basis points of easing at the next meeting in November, implying about a 10% chance of a quarter point cut.
The next reduction is not fully priced until April next year.
Against both the euro and the yen, the pound was up about 0.1%, extending on the gains from the previous day, when political developments rocked both currencies.
POLITICAL SHOCKS IN JAPAN AND FRANCE
In Japan, Sanae Takaichi won the race to become the next Liberal Democratic Party leader, and in turn, is set to be named the new prime minister.
Takaichi has pledged to jolt the Japanese economy with aggressive spending and has been critical of the Bank of Japan's interest rate hikes. Her victory over the weekend sent the yen tumbling on Monday, and the currency remains on the backfoot.
The unexpected resignation of French Prime Minister Sebastien Lecornu on Monday also triggered weakness in the euro, which has continued on Tuesday.
The currency, which has largely weathered France's political turmoil in the last 18 months, remains under pressure as the political uncertainty makes fiscal consolidation less likely.
ING head of forex strategy Chris Turner said currency investors will be watching the spread between German and French 10-year bond yields, a measure of the risk premium investors demand to hold French debt. The spread reached its widest level since January on Monday at 88 basis points.
"A move through 90 bps would raise some alarm bells and add to some independent weakness in the euro," Turner said in a note.
(Reporting by Samuel Indyk; Editing by Joe Bavier)
Foreign currency refers to any currency other than the domestic currency of a country, used in international trade and investment.
Currency hedging is a financial strategy used to protect against potential losses due to fluctuations in currency exchange rates.
Financial markets are platforms where buyers and sellers engage in the trade of assets such as stocks, bonds, currencies, and derivatives.
Monetary policy is the process by which a central bank manages the supply of money and interest rates to achieve specific economic objectives.
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