USD Strengthens as US-Iran Talk Progress Boosts Risk Sentiment; GBP Gains on Starmer Exit

The US dollar and British pound led major currencies during Monday's European session, while the Japanese yen lagged significantly. WTI crude oil declined 0.8% to $75.15 as US-Iran negotiations showed substantial progress, with Vice President Vance confirming positive developments and further technical talks scheduled to continue. The prospect of a diplomatic resolution eased geopolitical risk premiums, weighing on oil prices while supporting the dollar. In UK politics, Prime Minister Starmer announced his resignation, with Health Secretary Streeting backing Andy Burnham for the leadership bid, injecting fresh political uncertainty into sterling markets. Meanwhile, ECB policymaker Escriva warned that the central bank needs to closely monitor second-round effects on wages, suggesting the ECB remains cautious on cutting rates too aggressively. The yen's underperformance reflects widening yield differentials as markets anticipate the Bank of Japan maintaining its dovish stance relative to other major central banks. Traders should watch for further developments in US-Iran talks and UK political succession dynamics as key near-term catalysts.