As last week concluded, we began to see Sterling strengthen against the Euro and the Dollar by around 1% which was positive for Sterling sellers. The reason for this is that Sterling had begun to bottom out and became oversold, and traders generally see this as a good reason to put buy orders into the market.
This week, the results from the Tory leadership election will be in, and we will finally see Boris Johnson become PM- and though there is much debate about how his stance on Brexit will affect the markets- I think the stability of now having a PM will give the Pound some strength.
The real issue for Sterling, as we know, is Brexit. Until the UK has left with our without a deal, it is hard to pinpoint which direction Sterling will go, as there is too much uncertainty on the markets. Boris Johnson will become PM this week, and immediately Parliament will go into Summer Recess, which means that working out a deal for October 31st is impossible, with another extension imminent and a potential snap election coming up, it is hard to see why the Pound would strengthen considerably.
Before the end of the Month, this Fed is also set to cut interest rates (Which is priced into the markets) But we do expect to see some weakness in the U.S Dollar because of this, and the markets will be watching Fed Chair Powell for any guidance on if there will be any more cuts this year- the Bank of England are now also talking about potentially doing an interest rate cut this year which could weaken off Sterling more.