[MARKET ANALYSIS] USD continues strength, in thin trade; GBP awaits Burnham speech

G10s are mixed but mostly weaker against the Buck. Leading is JPY, flat against the Greenback, the worst performer is CHF after post-SNB weakness on Monday.
DXY continues its post-FOMC gains, topping 101 to a 101.12 high, not seen since May 2025, as markets retain Fed tightening bets (29bps by year-end). With domestic participants away for the Juneteenth holiday, the focus is on geopolitics, with the latest updates suggesting US VP Vance is no longer travelling to Switzerland due to the situation in Lebanon.
GBP in focus today after a convincing win for Labour’s Andy Burnham in the Makerfield by-election. Burnham is now firmly on course to challenge PM Starmer for the top job. Burnham is to the left of Starmer on the political spectrum, and his premiership would add 7-14bps of additional political premia to the UK 10yr yield, according to Pantheon Macroeconomics. We expect Burnham to speak at 10:00 BST, though he is unlikely to provide remarks on the economic manifesto. GBP flat after finding support below 1.32, as we await Burnham’s schedule to no. 10, alongside any reporting around cabinet appointments, should he launch that leadership bid.
EUR is a touch weaker against the Buck and flat against the Pound. Recent ECB rhetoric remains on the hawkish side, reflecting market pricing. ECB’s Lane was on the wires this morning, noting that inflation will remain above 3% for the rest of the year, and the EZ economy was resilient. EUR/USD found support towards March lows, around 1.14.
JPY was unreactive to broadly in-line Japanese inflation data, instead focusing on the possibility of intervention among thin US-holiday liquidity, a period where the MoF has shown a preference to intervene. Thursday saw USD/JPY print a session high of 161.81, the highest level since August 2024. Session high today of 161.46 could be extended in the absence of Jawboning from Japanese officials, and given USD gains in other pairs. In this scenario, USD/JPY could look to test the July 2024 high of 161.95.