The euro fell to its weakest level since May 2025, as France’s deepening fiscal crisis and the prospect of fresh political upheaval in the region rattled European markets.
The US bond buyback pledge that whipsawed markets this week is prompting comparisons with policies in Japan, where efforts to contain borrowing costs resulted in prolonged currency weakness.
Sterling hit its strongest level in a year as speculation incoming Prime Minister Andy Burnham will name a markets-friendly Chancellor of the Exchequer accelerated a shift away from bearish positions on the UK currency.
Currency traders are starting to buy protection against bigger exchange-rate swings after months of calm, as banks warn that shifting Federal Reserve expectations and elevated geopolitical tensions could be about to jolt markets.
The cost of hedging swings in the value of the pound hit the highest in almost three months as traders await a Bank of England interest-rate decision on Thursday and a by-election that could trigger a bid to oust UK premier Keir Starmer.
The yen surged 3%, its biggest gain in almost two years, after Japan intervened in the foreign-exchange market following a “final” warning by officials to investors against selling the currency.
