Analysts: Pound's Resilience to Fiscal Risks Unlikely to Last

On July 1, analysts from Monex Europe stated in a report that the pound is showing resilience to political headwinds, but this may not be sustainable. They noted, 'It is worth mentioning that the government's long-delayed defense investment plan provides little indication of how the government will fund the increased spending, despite the promised amounts being below already low expectations.' These analysts indicated that, in the context of high fiscal risks and political uncertainty, Monex continues to see a downside risk for the pound. Data from the London Stock Exchange Group shows that the pound fell 0.1% against a strengthening dollar to $1.3247, but rose to a 10-month high against the euro, trading at £0.8598 per euro. Prime Minister Keir Starmer announced his resignation last week.