The Currency Exchange · 2026-07-17 · 23 min
This week, Brian Daingerfield and Paul Robson discuss yet more sterling outperformance. While UK rates continue to support the currency, the discussion focuses on politics and fiscal credibility as the dominant drivers for sterling over the coming months. The pair also examine softer-than-expected US inflation data, asking whether this could mark a turning point for Federal Reserve expectations and the US dollar. Finally, they explore developments in Japan, where policymakers are considering ways to encourage domestic investment in government bonds - potentially creating longer-term support for the yen. Key takeaways: * Political and fiscal developments remain the dominant influence on sterling, with the Autumn Budget likely to become the next major catalyst. * NatWest’s Bank of England outlook remains unchanged despite recent geopolitical developments. * Softer US inflation could represent an important shift in the macro narrative if confirmed by future data releases. * Markets may have become too optimistic on the US dollar after several months of strong economic surprises.
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