Consequences of the Fed's change in approach
Undoubtedly, the June Fed meeting led by Warsh has changed the currency market landscape.
The US dollar is rebuilding its position, which is evident in the main currency pair of the world, currently near a key support level at 1.14, last seen in March of this year.
Projections for US interest rates have shifted dramatically – in March no one expected rate hikes by the end of the year, now most analysts anticipate at least one 25 basis point move upward in 2026.
With simultaneous rhetoric about limiting forward guidance, we have a clear signal to buy the “green”.
For the PLN this is not very good news, and selling pressure was visible even yesterday, when EUR/PLN broke the 4.27 level to climb above 4.28 today.
In financial markets we see a lot of nerves, which today spilled over into Asian stock markets – there were large declines, reaching 10% in Korea.
The situation on US stock exchanges also does not help, where the shine of tech giants is fading, led by SpaceX, which fell over 16% yesterday.
A long road to a final agreement
Yesterday positive information came from Switzerland, where a so-called 60‑day roadmap was agreed upon, aimed at reaching a final agreement between the US and Iran.
Another step in negotiations was most visible in oil prices, with Brent reaching its lowest level since early March, the same level seen in the early days of the war.
Signing the roadmap itself is already a success, as negotiations were extremely turbulent, and the Iranian side briefly left the talks after President Trump again threatened them. Investors are quite skeptical about this matter for two reasons.
First, in the past many aspects differed between the parties. Second, in recent hours Vice‑President Vance heated the atmosphere with information that Iran agreed to allow a group of international nuclear specialists in, while Tehran denied such arrangements took place.
This shows that obstacles continue to appear on the road to an agreement, and the fragility of the arrangements means we can witness many more twists.
He is being built as a favorite
For several weeks, those watching the UK market have been asking whether the current prime minister will resign, or when it will happen.
Therefore, Starmer's Monday decision was not a surprise. The greater uncertainty concerned what would happen later, and whether there would be a “fight” for the leadership seat in the Labour Party.
Two names were in the running for the “throne” – Andy Burnham and Wesley Streeting.
Since the second candidate has withdrawn, this uncertainty seems likely to be quickly dispelled.
We may witness a swift transfer of power, which for the GBP means positive news. However, the problem is that in this case it will be easier to gain power than to maintain it later.
The UK’s economic situation is difficult, and the state of public finances may cause alarm.
Everything is complicated by the profitability of UK bonds, which remain at high levels – for 10‑year bonds it is already 4.76%, causing financing costs to rise significantly.
