The dollar rally has been driven mainly by a reassessment of the Fed outlook. Markets may have gone too far in pricing in Fed rate hikes; we still expect rate cuts. Extreme positioning in sterling and yen increases the risk of sharp currency moves. Dollar strength may continue over the summer, but US risks could return to focus after the holiday period.

UK Prime Minister Starmer has resigned. The decision did not come as a surprise following his rival Andy Burnham’s landslide victory at last Thursday’s by-election. As we said in our Top of Mind webinar, Burnham will almost certainly go on to become the UK’s next prime minister. Indeed, one of his closest rivals Wes Streeting also came out this morning to endorse Andy Burnham, and it is possible that Burnham may become PM unopposed. Other possible challengers such as Angela Rayner and Ed Miliband have yet to explicitly state their stance.

Expanding renewable energy sources, alongside investments in grids, storage, and supply chains, creates a sustainable and affordable energy system while reducing import dependency. Despite progress, projections show a significant gap between the current trajectory and the 2030 targets, prolonging reliance on imported fossil fuels and increasing geopolitical risks. Reducing energy intensity and improving efficiency decouples economic growth from energy consumption, strengthening competitiveness and lowering exposure to volatile energy markets. The expansion of electrification, based on the expansion of renewable energy, is crucial to safeguarding the EU’s energy security. Energy efficiency, innovation and the reuse of raw materials make countries less dependent on volatile energy markets and imports. Expanding storage capacity, refining facilities, and grid infrastructure ensures stability during energy crises and supports the transition to renewables. Integration of cross-border energy systems, aligned policies, and collaborative strategies strengthen resilience and reduce dependencies on external suppliers.