May 12 (Reuters) - - It now looks like a case of when, not if, Keir Starmer exits Downing Street, after a flood of Labour lawmakers urged him to quit. The key question for sterling is who might follow Starmer, and when?

If Wes Streeting is Britain's next prime minister, the pound could rally, as Streeting is a centrist - and thus market-friendly. In contrast, GBP could sink if either Andy Burnham or Angela Rayner takes up residence in Number 10. Last autumn, Burnham said: "We've got to get beyond this thing of being in hock to the bond market."

The process by which Starmer replaced his predecessor Jeremy Corbyn took four months, and before that it took Corbyn five months to replace Ed Miliband.

Labour's annual party conference is four-and-a-half months away, in Liverpool on September 27-30. GBP/USD slid to a May low of 1.3503 on Tuesday, with GBP/EUR falling to a three-week low of 1.1499, as the pound was negatively impacted by the UK political uncertainty and higher gilt yields.

Related:
GBPEUR


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• USD/CNH last 6.7937, tad higher than Monday but a bit shaky

• Would be new lowest since Mar 2023 if below yesterday's 6.7901

• Sudden but brief USD/JPY dip to 156.74 revives intervention fears

• Traders may pre-empt another drop, trigger a pullback in USD/AXJ

• But for now, higher UST yields ahead of US CPI support dollar

• Possible disappointment at inflation data poses a risk for USD longs
CNH


(Ewen Chew is a Reuters market analyst. The views expressed are his own.)

• FX options expire at 10-am New York/14.00 GMT on Tuesday May 12

• EUR/USD: 1.1700-10 (2.5BLN), 1.1715-20 (502M), 1.1740-50 (4BLN), 1.1750-55 (2.1BLN), 1.1765-75 (598M)

• 1.1785 (1.2BLN), 1.1800 (1.7BLN), 1.1810-20 (1.5BLN), 1.1830 (365M), 1.1850-60 (461M)

• USD/CHF: 0.7825 (601M), 0.7840-50 (841M)

• EUR/GBP: 0.8635 (353M), 0.8730 (270M). GBP/USD: 1.3445-50 (300M), 1.3480-95 (550M), 1.3680 (268M)

• AUD/USD: 0.7070-80 (1.1BLN), 0.7180-85 (214M). NZD/USD: 0.5950 (240M). AUD/NZD: 1.2170 (247M)

• USD/CAD: 1.3620 (340M), 1.3745-55 (378M), 1.3780-90 (437M), 1.3795 (320M)

• USD/JPY: 156.00-10 (1.6BLN), 156.20-30 (376M), 156.50 (1.1BLN), 158.35 (597M), 158.50 (301M), 158.65-70 (533M)

• EUR/JPY: 185.00 (250M)

• FX options wrap - CPI risk premium exposes the cheap fear landscape (Richard Pace is a Reuters market analyst. The views expressed are his own)

• Indian metal stocks climb 1%

• Top sectoral gainer on benchmark Nifty 50 , which is down 1%

• Gains mirror those in Shanghai copper, which logged its biggest daily gain in months as supply concerns and expectations of higher demand from China

• Peru's move to let Petroperu secure $2 billion in state-backed loans to sustain operations has raised trader concerns that energy shortages could disrupt copper supply

• Hindustan Zinc leads gains on sub-index with 3.5% climb, followed by Vedanta's 3.1% rise

• Hindustan Copper gains 2%

• YTD, sub-index climbs 16.8% vs Nifty's 9.7% drop

(Reporting by Kashish Tandon in Bengaluru)

• Shares of Koonenberry Gold rise as much as 8.7% to A$0.025, their highest level since April 8

• Gold explorer says results from Sunnyside Shear Zone at its Enmore Gold Project show significantly extended broad intervals of gold mineralisation, returning high grades

• Also shows continuity across five drill sections from surface to an average depth of 370 m

• KNB plans follow-up drilling at project whilst continuing to accelerate regional exploration at both the Enmore and Lachlan Projects

• About 1.7 million shares change hands, 1.9 times the 30-day avg

• Down 41.5% YTD, including the session's moves

(Reporting by Anjali Singh in Bengaluru)

• AUD/USD -0.2% Tue, trading subdued ahead of important U.S. inflation update

• U.S. Apr CPI due Tue, Reuters poll consensus +0.6% m/m, +3.7% y/y

• NAB business confidence -24 (prior -29), remains dire despite slight uplift

• AU federal budget due Tue, inflationary impacts heavily scrutinised

• AU Q1 wage price index due Wed, will gauge stubborn services inflation

• AUD pressing lower hourly Bollinger band, downside progress likely to slow

• Stalemate in U.S.-Iran peace negotiations increases re-escalation risk

• Range Asia 0.7229-51, support 0.6834 0.6660, resistance 0.7283 0.7661
AUD Hourly Bollinger Study

(James Connell is a Reuters market analyst. The views expressed are his own.)

• Australian gold stocks rise as much as 4.4% to their highest since April 24

• Gold prices edged up on Monday as investors assessed developments in U.S.-Iran diplomacy [GOL/]

• Evolution Mining , Northern Star Resources

and Ramelius Resources gain between 4.1% and 4.2%

• Sub-index down 3.5% so far this year
(Reporting by Keshav Singh Chundawat in Bengaluru)

• Shares of Australian copper miners hit multi-month peaks to become among the top gainers on the broader benchmark, which is down 0.3%

• Copper prices were set to close at an all-time high as worries about supply shortages outweighed concerns about lower demand due to the stalemate in the Iran war [MET/L]

• Canada-based miner Capstone Copper's ASX-listed shares

rise as much as 3.8% to A$13.51, extending gains for the second consecutive session

• Sandfire Resources advances 3.2% to A$19.13, on track for five consecutive sessions of gains

• Both stocks hit their highest point since early March

(Reporting by Nikita Maria Jino in Bengaluru)

• USD/JPY holding relatively bid after push up to 157.27 EBS yesterday

• Asia 157.17-24 so far, holding below 157.36 100-DMA still

• Wariness over fresh FX intervention, last presumed May 6 from 157.93

• Japan FinMin Katayama-PM Takaichi meetings with US TsySec Bessent eyed

• Will Bessent green light more action? Will he push for BOJ hike again?

• USD/JPY for now within parameters of 156.28-158.91 daily Ichimoku cloud

• Japanese importer buys eyed into Tokyo fix, specs on hold pre-FX news

• On options front, smattering of expiries today on 158, 159

• Nothing massive till 156 handle, total $3.2 bln between 156.00-50

• JGB-US Treasury rate differentials looks to be in stasis for now

• Differential in 2s @253 bps, in 10s @187 bps

• Related comments , , ,

• And , , , also

• US markets , , ,

• On US-Iran , for more click on [FXBUZ]

USD/JPY:


Japan's unilateral intervention to strengthen the yen:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• AUD/USD flatlines wtd as markets assess status of Middle East conflict

• Trump says Iran ceasefire "on life support" after rejecting Iran's proposal

• Brent crude up 3.4%, but U.S. equities & risk proxy assets steady for now

• AUD trending higher overall, but U.S.-Iran war news will dictate short term

• AU federal budget due Tue, expect scrutiny for any inflationary impacts

• U.S. Apr CPI update due Tue, Reuters poll consensus +0.6% m/m, +3.7% y/y

• AU Q1 wage price index due Wed, will gauge stubborn services inflation

• Overnight range 0.7236-595, support 0.6834 0.6660, resistance 0.7283 0.7661
AUD Hourly Bollinger Study & DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

MUFG Research sees a scope for USD outperformance in the near-term.

"The Trump response to the Iran response to US proposals to end the war as “totally unacceptable” leaves risks of a renewed energy price spike skewed to the upside. The US dollar is stronger today but only modestly and there remains time based on the very favourable global inventories available prior to the start of the war. But the Amsterdam-Rotterdam-Antwerp energy hub is seeing jet fuel inventories falling sharply to a six-year low," MUFG notes.

"Most estimates suggest some time during June would be the critical point for refined fuel shortages in Europe so there remains a period of time before disruptions become evident. Still, with risks of disruption rising, the appetite for selling the dollar at these weaker levels is likely to diminish," MUFG adds.

• GBP$ ekes out small gain in Monday trading, +0.06^ at 1.3643; Mon range 1.3653-1.3548

• Trump says Iran ceasefire is 'on life support' after he rejects Tehran's response

• Pair eyed May 1 trend high at 1.3658, unable to rise above, remains in 1.3448-1.2658

• Recent trading hovered on top side of range b/w daily cloud top (1.3514) and May 1 high

• Cable rallied off early political-related lows as PM Starmer pleads for time

• UK rate expectations remain elevated +66bp priced by YE 2026; 10-yr gilt yield abv 5%

• GBP$ res 1.3658 May 1 trend high, 1.3712 daily high Feb 11, 1.3724 upper 30-d Bolli

• Supt 1.3600 psychological lvl, 1.3566 bruised 10-DMA, 1.3514 daily cloud top

(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

• NY opened near 1.1770 after 1.17425 traded overnight, rally extended early NY

• Softer USD, US yields , oil & drop in USD/CNH helped lift EUR/USD

• 1.1794 traded but the pair pulled back on Pres. Trump's comments on the ceasefire

• EUR/USD neared 1.1770 then climbed again & sat near 1.1780 late in the session

• Gains in gold, silver, stocks & oil eroding some gains helped the pair's late lift

• EUR/USD traded down only -0.06% in NY's afternoon

• Pair's holds above the 10- & 21-DMAs, rising monthly RSIs gives bulls some comfort

• Daily bull hammer formed after 21-DMA was neared, gives bulls more comfort
eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• NY opened near 0.7240 after the pair fell toward the 10-DMA & hit 0.7205 overnight

• Softer USD, US yields , oil helped AUD/USD continue its rise

• Rallies in gold, silver, copper, stocks & drop in USD/CNH added to the pair's buoyancy

• AUD/USD turned positive, hit 0.7260, sat near 0.7255 late, was up +0.10% late in the day

• Techs lean bullish; RSIs are rising, pair holds above the rising 10- & 21-DMAs

• AUD/USD's hold above the 61.8% Fib of the 0.8007-0.5910 drop reinforces bull signals
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

JP Morgan likes adding USD/JPY short on rallies into 158.

"Not a whole lot to add here as we reclaim the 157 handle in USDJPY amidst the pop in oil overnight on Trump's dissatisfaction with the Iranian nuclear proposal," JPM notes.

"Game plan here remains to fade yen weakness and will add towards 158 as we do not think the MoF are done. Franchise saw some local RM JPY demand overnight, important levels remain the cloud (156.28, 158.76), 200d at 154.32, 100d is 157.36 and 50d at 158.70," JPM adds.

• Ether rallied to a 5-session high earlier, hit 2380.54, sellers then emerged

• Ether fall towards the 10-DMA, neared flat on the session, was up only +0.25%

• Most gains were erased despite overall risk-on sentiment in the markets

• Lower USD & USD/CNH and gold, silver, stock gains didn't inspire Ether bulls

• A daily inverted hammer candle formed for Ether, is a bearish signal

• That signal reinforces bear signal from bear pennant on daily charts

• Ether's persistent consolidation of drop from the Jan. high adds to bear signs

• February monthly low is support, if breaks 2025 yearly low is in focus
eth


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

ANZ Research likes buying USD/JPY on dips below 155.

"We expect structural demand below 155 in the near term, with 160 acting as a practical cap given elevated intervention risk. In the absence of coordinated action or a meaningful decline in US rates, sustained downside below the mid-150s looks difficult," ANZ notes.

"The Fed’s January rate checks – moving USD/JPY from 159 to 152 – also suggest the US administration may be comfortable with a weaker trade-weighted USD. Bottom line: Japanese authorities can restrain extremes, but until US rates turn decisively lower, coordinated intervention comes into play and/or the BoJ’s hikes more aggressively, USD/JPY is likely to remain supported on dips," ANZ adds.

Sterling is likely to remain confined within its recent ranges as geopolitical tensions and domestic political challenges continue to weigh heavily on the currency.

Despite the heavy atmosphere, the pound staged a steady recovery today, rising from Asia session lows of 1.3548 to trade as high as 1.3548 in early NorAm. This move came amid heightened Middle East angst after President Donald Trump rejected Iran's response to U.S. peace proposal, which initially spiked safe-haven demand before markets settled into a cautious holding pattern. In the UK, last week’s local election losses by the ruling Labour Party have called into question the staying power of Prime Minister Keir Starmer, who has responded by promising to be bolder and with a plea to avoid the chaos of a leadership contest.

Sterling is also dogged by persistent economic malaise and fiscal concerns. While high interest rates are being used to combat stubborn inflation, they simultaneously act as a headwind to growth, likely capping any significant appreciation.

Technically, GBP/USD remains stuck in a 1.3550–1.3650 range. Beyond that range, resistance is noted at the upper 30-day Bollinger Band near 1.3722, while the 100-DMA at 1.3483 provides key support. Although a surprise peace deal could trigger an algo-driven surge higher, due to large net speculative short positions, any such rally is expected to be transitory as focus inevitably shifts back to the UK's downward-tilted economic fundamentals.
Chart:


(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

Bank of America Global Research changes its Fed rates call.

"We no longer expect the Fed to cut rates this year. We have pushed the two cuts in our forecast out from Sep-Oct '26 to Jul-Sep '27. The terminal rate stays at 3.0-3.25%," BofA notes.

"We think Warsh will push for lower rates, but the data flow precludes cuts for now. However, cuts should be in play by next summer, with inflation much closer to target,"BofA adds.

Goldman Sachs Research discusses the scope of JPY intervention.

The MOF apparently conducted another round of intervention on May 6, possibly around the same size as the first one on April 30 and similarly against broader macro pressures. While the MOF still has plenty of capacity to conduct subsequent rounds of intervention with roughly $1.1tn left of cash and securities combined, we do not see a compelling case to significantly deplete reserves in the current backdrop," GS notes.

"First, if the MoF were to shift to selling Treasuries, it would put further upward pressure on US yields and arguably prove self-defeating. Second, and in a similar vein, as long as the currency is prevented from weakening in line with fundamentals, the lever of adjustment will fall on JGBs," GS adds.

• Cable eased to 1.3586 as pound softened on X post from from ITV's Peston

• Peston says West to "press ahead with her stalking-horse leadership challenge"

• 1.3610 is subsequent high, following BBC report about West's aim

• West wants Starmer to set a timetable for election of new leader in September

• 1.3614 was London morning high, before a speech from UK PM Starmer

• Starmer says he will not walk away and vows to prove doubters wrong

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• AUD/USD fell sharply in Asia on report Pres. Trump said he didn't like Iran's response

• USD, US yields, oil rallied on the report & gold, silver, stocks fell; helped weigh on AUD/USD

• AUD/USD neared the 10-DMA, hit 0.7205, buyers emerged however as USD buying abated

• The pair steadily rallied, hit 0.7255 in Europe's morning, NY opened near 0.7245

• AUD/USD traded down only -0.03% early NY, was close to filling gap from Friday's close

• A long legged doji candle formed suggests bulls still have control of the pair

• Pair's hold above 10- & 21-DMAs, rising monthly RSI, consolidation are all bullish signals
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

(Updates)

• Indian gems and jewellery stocks fall 5.5%-11% after PM Narendra Modi urgescitizens to avoid buying gold to save foreign exchange, following U.S. President Donald Trump rejectionof Iran's response to a peace proposal

• Titan falls as much as 7.95% to 4,150.10 rupees; Kalyan Jewellers drops ~10% to 382.10 rupees; Senco Gold sheds ~11% to 325.05 rupees

• Titan, Kalyan Jewellers reported quarterly results on Friday; y/y net profit up ~35.4% and ~118%, respectively, driven by strong demand

• Brokerages say TITN's market-share gains and buyer growth recovery continue to support medium-term growth outlook despite elevated gold prices

• Expect resilient margins aided by lightweight jewellery, exchange schemes

• Analysts say KALN's rapid store expansion in newer markets continues to support growth

• Operating leverage is helping offset margin pressure from higher gold prices, franchise mix for Kalyan

(Reporting by Bipasha Dey in Bengaluru)

• USD/JPY has seen a 156.48-157.17 EBS range on Monday. It remains stuck within the daily cloud

• Spot failed to close under the cloud, which spans 156.29-158.68, repeatedly in recent trading sessions

• Japan's intervention success will likely be fleeting, those repeated failures underpin USD/JPY

• USD/JPY and yen crosses are better bid but intervention watch continues

• Japan bets on Washington, BOJ for extra punch in yen battle

• 30-day log correlation between USD/JPY and EUR/JPY is above +0.5 (pairs moving in tandem)

Daily Chart


Correlation Chart


(Martin Miller is a Reuters market analyst. The views expressed are his own)