Pound Slides After UK Starmer's Reshuffle

(RTTNews) - The British pound weakened against other major currencies in the European session on Tuesday, amid rising concerns about the UK government's ability to maintain fiscal discipline. In order to meet her fiscal goals, Chancellor Rachel Reeves is anticipated to increase taxes in her autumn budget, which could likely weigh on economy.

Prime Minister Keir Starmer of the United Kingdom reorganized his staff on Monday in an attempt to strengthen his office ahead of what is expected to be a challenging year-end.

French Prime Minister Francois Bayrou has declared that the "fate of France" is on the line in a confidence vote scheduled for September 8, 2025.

As war rages on in Ukraine, U.S. Treasury Secretary Scott Bessent said that all options were on the table regarding sanctions on Russia for its continued war in the country.

The Trump administration has approved the sale of 3,350 Extended Range Attack Munitions (ERAM) missiles to Ukraine, providing a potentially powerful tool to Kyiv as it continues to face a relentless assault by Russia.

Kremlin foreign policy adviser Yuri Ushakov said that there are no concrete plans for a trilateral meeting between the presidents of Russia, Ukraine and the U.S, contradicting Trump's words about what was agreed at the Alaska meeting.

Market anticipates that the Bank of England (BoE) will lower interest rates during this month's policy meeting.

Catherine Mann, a member of the BoE Monetary Policy Committee (MPC), said this week that interest rates should stay restrictive for a longer time until negative economic risks arise. Given the continued rise of inflation in the UK, Mann advised against easing monetary policy.

Traders also shifted focus to upcoming U.S. employment data for clues on the Federal Reserve's next steps.

In the European trading today, the pound fell to near 4-week lows of 0.8701 against the euro, 1.3375 against the U.S. dollar and 1.0759 against the Swiss franc, from early highs of 0.8642, 1.3548 and 1.0850, respectively. If the pound extends its downtrend, it is likely to find support around 0.88 against the euro, 1.31 against the greenback and 1.06 against the franc.

Against the yen, the pound edged down to 198.81 from an early more than 2-week high of 200.27. The pound may test support near the 195.00 region.

Looking ahead, U.S. and Canada S&P Global manufacturing PMI reports for August, U.S. construction spending for July and U.S. RCM/TIPP economic optimism index for September are slated for release in the New York session.