FX.co ★ Sterling Climbs Toward 2-Week High

The British pound climbed to $1.354, marking its highest level in approximately two weeks, as risk appetite improved following the announcement of a trade agreement between the United States and Japan. The deal incorporates a 15% tariff, sidestepping the more severe 25% rate initially planned, and introduces a $550 billion investment fund for the U.S. President Trump praised the arrangement as "a great deal for everybody," enhancing global trade sentiment.

In the United Kingdom, the focus shifts to significant economic data. Preliminary Purchasing Managers' Indexes (PMIs) are anticipated to reveal the mildest contraction in manufacturing in six months, alongside the strongest growth in the services sector in nearly a year. Retail sales are also expected to bounce back, aided by warmer weather. However, the UK's financial situation remains challenging, with a reported £20.7 billion budget deficit for June, marking the second-highest figure for that month since 1993. Interest payments have reached £16.4 billion, largely due to costs associated with inflation-linked gilts. This rise in borrowing fuels speculation that Chancellor Rachel Reeves may consider a tax increase in the upcoming autumn budget.