Published Mon, Jul 20, 2026 · 08:11 PM
[LONDON] The US dollar was broadly steady on Monday (Jul 20) as cautious investors watched out for signals on the direction of the Iran war, while the pound edged higher as markets prepared for new British Prime Minister Andy Burnham. The dollar index, which measures the greenback’s strength against a basket of six currencies, was little changed at 100.78.
Iran’s Revolutionary Guards said on Monday they had struck US military assets across the Middle East after another night of US bombardment of Iranian cities, in a conflict that has disrupted energy supplies and stoked fears of global inflation.
“Markets, I think, have become somewhat more comfortable with the range of risks to be priced in and until something happens that catches traders by surprise, we’re just not going to see a huge amount of volatility for the Middle East,” Nick Rees, head of macro research at Monex Europe, said.
“It’ll keep markets nervous. It’ll keep markets cautious. But I think we’re really going back to where we were, not in April, but in May, where volatility ground lower, because we saw just a general lack of conviction on where things were going to trade next,” he said.
Brent crude futures were last a touch higher at US$88.43 a barrel, having risen above the US$90 mark earlier in the day.
The euro was broadly steady at US$1.1432, while the British pound was 0.1 per cent higher at US$1.3466 as Burnham took over from Keir Starmer.
Traders are especially keen to see who Burnham will pick as the new finance minister given the UK’s tricky fiscal position. UK assets last week were supported by reports that the job would likely go to Shabana Mahmood, widely regarded as a centrist, rather than a more left-leaning candidate.
“While we do not rule out a little further sterling strength during the Burnham honeymoon period, the UK’s tight fiscal situation suggests a new Cabinet will have to turn to tax increases if it wants to build out its plans to improve areas such as social care,” Chris Turner, head of global markets at ING, said in a note.
Elsewhere, the US dollar was down 0.14 per cent at 6.7688 against the Chinese yuan in offshore trade after China kept its benchmark lending rates unchanged for a 14th consecutive month on Monday, in line with market expectations. Against the yen, the US dollar was flat at 162.39 yen in thin liquidity as Japan observed the Marine Day holiday.
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Cleveland Fed president Beth Hammack on Friday added her voice to a growing chorus of policymakers arguing interest rates may need to rise to beat back persistent inflation, setting up a charged debate at the Fed’s next meeting and the possibility of dissents at chair Kevin Warsh’s second meeting at the helm. REUTERS
