Published: 13/05/2026 By ECAP
FRAGILE POLITICS
The British Pound weakened on Tuesday, falling to its lowest level in three weeks as political uncertainty in the UK unsettled investors. Concerns grew over Prime Minister Keir Starmer’s position after Labour’s poor local election results and reports of unrest within the party. Markets worried that any leadership change could lead to higher government borrowing. Attention now remains firmly on political developments in Westminster, which may continue to influence confidence in the Pound.
The Euro strengthened on Tuesday after improving economic confidence in Germany helped lift sentiment toward the Eurozone economy. Better than expected survey data eased concerns about growth in the region’s largest economy, giving the single currency support despite cautious market conditions. Investors are now watching upcoming Eurozone economic data closely, particularly industrial production and inflation signals, as weaker figures could slow the Euro’s recent momentum and affect confidence in the wider economic outlook.
The US Dollar gained support as investors became more cautious amid rising tensions between the US and Iran. Concerns over the fragile ceasefire, threats of renewed military action, and disruption in the Strait of Hormuz increased demand for safer assets. Strong US markets and attractive bond yields also continued to support confidence in the Dollar. While some expect longer-term weakness, near-term uncertainty has helped maintain demand for the currency.
Data supplied by GC Partners