The British Pound Sterling is spending Monday learning the difference between a recovery and a reprieve.

The shared currency begins the week on a lower note, down 0.31% as risk aversion fueled flows towards the US Dollar amid heightened tensions in the Middle East. Also, hawkish comments by a Fed official underpinned US Treasury yields, suggesting markets expect the US central bank to raise rates.

The New Zealand Dollar recoiled during Monday’s North American session, down 0.12%, as the Greenback posted gains versus most G8 FX currencies amid rising geopolitical tensions and hawkish comments from a Fed Governor. The NZD/USD trades at 0.5754, down from daily highs of 0.5789.

USD/JPY trades higher near 162.40 on Monday as the Japanese Yen (JPY) weakens amid escalating tensions between the United States (US) and Iran. The US Dollar (USD) remains supported by higher Oil prices and growing concerns that renewed energy pressure could keep global inflation elevated.

AUD/USD trades lower near 0.6930 on Monday, retreating from an opening level of around 0.6950 as escalating tensions between the United States (US) and Iran bolster the safe-haven US Dollar (USD) and weigh on the risk-sensitive Australian Dollar (AUD).

The Swiss Franc (CHF) weakens against the US Dollar (USD) on Monday as traders react to renewed hostilities in the Middle East. At the time of writing, USD/CHF trades around 0.8126, up 0.50% on the day and marking its highest level since June 25.

The Pound Sterling begins the week on a lower note, as over-the-weekend developments in the Middle East fueled inflationary pressures due to the rise in Oil prices. At the time of writing, the GBP/USD trades at 1.3369, down over 0.20%.

The Canadian Dollar (CAD) outperforms most of its major peers on Monday as renewed tensions in the Middle East push Oil prices higher amid fresh risks of supply disruption in the Strait of Hormuz.

MUFG’s Lee Hardman reports the Japanese Yen has weakened again, pushing USD/JPY back above 162.00 as higher energy prices and fading impact from last week’s verbal intervention weigh on the currency.

Silver (XAG/USD) attracts sellers on Monday after renewed fighting between the United States (US) and Iran over the weekend revived energy-driven inflation concerns and reinforced expectations of a Federal Reserve (Fed) interest rate hike later this year.

BNY’s Geoff Yu highlights that Japan remains a key source of two‑way FX volatility as markets digest conflicting signals on Government Pension Investment Fund (GPIF) allocations.

Rabobank's Senior FX Strategist Jane Foley describes how the Swiss National Bank has actively countered safe haven inflows into the Swiss Franc since the Iran war, selling CHF and signalling increased willingness to intervene.

Germany Current Account n.s.a. declined to €10.4B in May from previous €13.8B

EUR/USD trades with a mild positive bias on Monday as the US Dollar (USD) gives back its earlier gains. At the time of writing, the pair trades around 1.1424 after recovering from an intraday low of 1.1384.

Societe Generale’s Kenneth Broux describes USD/JPY consolidating after failing again at resistance near 162.80. The pair is seen in a narrow range, with key support at 160.40 tied to the March peak and upside projections towards 163.70/164.40 if resistance breaks.

UOB’s Lee Sue Ann and Jester Koh note that the Reserve Bank of New Zealand raised the Official Cash Rate to 2.50% in July and adopted a more hawkish tone as inflation risks remain elevated.

The British Pound (GBP) recovers its early losses and flattens around 1.3400 against the US Dollar (USD) during the European trading session on Monday.

The New Zealand Dollar (NZD) retraced previous losses against the US Dollar (USD) on Monday and trades higher for the fourth consecutive day, approaching three-week highs near 0.5800.

UOB’s Quek Ser Leang and Lee Sue Ann observe that AUD/USD has been range‑trading slightly higher than expected, with intraday levels seen between 0.6920 and 0.6960. The earlier tentative upside momentum has faded, and for the next 1–3 weeks the pair is expected to trade between 0.6890 and 0.6975.

BNY’s Geoff Yu argues that United Kingdom (UK) assets, including the British Pound (GBP) and gilts, will react more to the choice of chancellor under incoming Prime Minister Andy Burnham than to the leadership change itself.

The Australian Dollar (AUD) posts marginal losses against the US Dollar (USD) on Monday, as the pair's reversal from Friday's 0.6970 highs found support above 0.6120. Rising tensions in Iran have hammered risk appetite, but the US Dollar’s weakness is keeping the Aussie from retreating further.

The Euro (EUR) claws back its early losses and turns slightly positive at around 1.6170 against the Canadian Dollar (CAD) during the European trading session on Monday. The cross bounces back as the Euro strengthens amid hopes that the ongoing aggression in the Middle East won’t be prolonged.

EUR/USD gains ground after posting losses in the previous day, trading around 1.1440 during the European hours on Monday. The currency pair holds just above the nine-day Exponential Moving Average (EMA) but remains capped by the 50-day EMA, keeping the near-term tone cautiously bearish.

UOB’s Quek Ser Leang and Lee Sue Ann report that USD/JPY rebounded after a sharp drop to 161.26, with intraday gains expected to be capped between 161.60 and 162.45. Over the next 1–3 weeks, the outlook is described as mixed, with trading likely between 160.60 and 163.00.

The US Dollar posts moderate gains against the Swiss Franc (CHF) on Monday, yet with price action contained within the last two weeks’ trading range, and with the 0.8100 level capping bulls for now.

Commerzbank’s Tatha Ghose contrasts upbeat remarks from CBT governor Fatih Karahan with more cautious comments from deputy governor Gazi Ishak Kara on Turkey’s inflation dynamics.

The Euro (EUR) is higher by 0.36% to near 185.25 against the Japanese Yen (JPY) during the European trading session on Monday. The Japanese Yen underperforms across the board despite hopes that Japan’s inflation would remain above the Bank of Japan’s (BoJ) 2% target for a longer period.

The USD/JPY pair sticks to its modest intraday gains through the early European session on Monday and currently trades above the 162.00 mark, up 0.30% for the day.

XAG/USD struggles for the second consecutive day, trading around $58.20 per troy ounce during the European hours on Monday. The technical analysis of the daily chart shows that the spot price is remaining within the descending channel pattern, suggesting a prevailing bearish bias.

UOB’s Quek Ser Leang and Lee Sue Ann note that GBP/USD gapped lower after briefly breaking above 1.3445, with momentum turning down and risks of a test below 1.3360, though 1.3320 is seen as distant for now.