Markets Pause as Intervention, Energy and Growth Risks Compete for Attention: Sterling Update

Markets paused on Monday as intervention, energy, and growth risks vied for attention. Oil prices dropped following a US-Iran deal, with Brent crude falling to $83 per barrel from a high of $102. However, optimism around energy prices may be short-lived due to conflicting statements from Iran and the US. The US intervened in the foreign exchange market to lower the value of the Japanese Yen, buying approximately $50 billion in yen and selling $5-10 billion in euros.

This intervention brought USDJPY to a low of 155.23, a decline of roughly 5.3% during the intervention period. Financial markets may now focus on the release of July non-farm payrolls data, with concerns about continued sub-trend growth in the UK and downward pressure on the GBP. Meanwhile, EU gas inventory levels are at 18-year lows, potentially creating upward pressure on energy prices as demand increases during the autumn and winter months.