UK currency dipped slightly after the seizure of the UK-flagged tanker in the Straits of Hormuz.

The dollar regained some ground on Friday as expectations of aggressive Fed rate cuts this month faded again with markets back to pricing in a 0.25% rate cut.

The Euro was again hampered by expectations of further ECB monetary easing this quarter as markets targeted key EUR/USD support.

The Swiss franc secured strong demand amid fears over currency wars and ECB easing with EUR/CHF at 23-month lows.

Global equities drifted lower despite monetary-easing expectations amid unease over the earnings outlook and trade uncertainty.

After drifting lower, a renewed increase in Middle East tensions boosted oil prices. Silver retreated from fresh 11-month highs, although there was strong support on dips.

The UK June borrowing requirement widened to £7.2bn from £3.4bn the previous year and the widest June deficit since 2015 which triggered some concerns, although the higher deficit was due to increased spending rather than a slide in revenue.

Sterling was unable to make further headway on Friday despite some further positive rhetoric on Brexit from EU officials.

Late in the day, the UK currency dipped slightly after the seizure of the UK-flagged tanker in the Straits of Hormuz. GBP/USD dipped to near 1.2500 against the dollar while GBP/EUR found support on approach to 1.1050.

CFTC data recorded a further small increase in non-commercial short Sterling positions to fresh 9-month highs which should offer an element of protection against further selling and could trigger a short squeeze if there is a shift in sentiment.

Over the weekend, Chancellor Hammond confirmed that he would resign if Boris Johnson wins the Conservative Party leadership election and there was mixed Brexit rhetoric with GBP/USD settling around 1.2500 on Monday.

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