The pound is slowly chewing through last week's losses.
It's trading at a session high, up 79 pips to 1.2646 in the second day of gains. It comes after a tough three day stretch late last week that sent it to the lowest since May.
This week, the US dollar has been softening on the pick of Scott Bessent as Treasury Secretary and indications that Kevin Warsh is the favourite to replace Jerome Powell in 2026. That's put a bid into bonds, dragging 10-year yields from 4.50% mid-month to 4.25% today.
Trump's tariff threat on Canada and Mexico is also not landing the way that many thought. It's looking toothless and like a path to negotiations rather than a real threat. That has the market ratcheting down tariff estimates, which should be good for global growth.
All that is very speculative but the market is trying to get a read on the next four years. I also highlighted yesterday a path where the main lever that Trump might use is a softer currency.