The British Pound is the day’s best performing currency as markets expect the resignation of the UK Prime Minister. The Pound is currently trading 0.12% higher, while the second best performing currency is the US Dollar, up 0.3%. However, technical analysts are cautious about the GBPUSD and trading against the US Dollar due to Fed hawkishness.

The worst performing currencies of the past week were the Swiss Franc, New Zealand Dollar and the Canadian Dollar. The Canadian Dollar is particularly under pressure from poor Canadian economic data and lower oil prices. The currency market is likely to witness further volatility this afternoon as Canada releases its Consumer Price Index. Furthermore, tomorrow’s PMI reports are likely to see higher volatility on the US Dollar, Euro and Great British Pound.

Why is PM Starmer Resigning?

The resignation of Prime Minister Keir Starmer is not necessarily a new story for the UK, nor is it yet confirmed. The PM’s resignation has been a theme in UK politics since 2025 when the Peter Mandelson scandal came to light. Peter Mandelson's appointment by Keir Starmer attracted significant criticism and negatively affected perceptions of his leadership.

However, the reason for the resignation is the growing internal rebellion within the party since the poor local election results. Leadership challenges is also another reason, particularly from Andy Burnham, who has gained substantial support among Labour MPs and is widely viewed as a potential successor.

If Andy Burnham becomes the new UK Prime Minister, markets will closely watch whether he replaces the UK Chancellor. If he appoints a new Chancellor, the GBP will likely experience higher volatility. However, the GBP outlook will depend on the replacement and their views on the UK’s monetary policy.

The effect of Andry Burnham being appointed cannot be known. On the one hand, Mr Burnham has well-respected economists as advisors. These include ex-BOE members and Goldman Sachs economists. Additionally, he has spoken about making cuts to welfare, which goes down well with investors. However, on the other hand, many investors fear he is looking to loosen fiscal policy which in the past has significantly damaged the Pound.

Great British Pound - Up in the Short-term, But Long-Term Pressures Remain

During the Asian session, the GBPUSD is witnessing both up and down volatility but continues to maintain bearish signals. The GBP index is trading higher so far, but the US Dollar is the best performing currency of the month. For this reason, even if the GBP can build momentum to form a bullish impulse wave, technical analysts will remain cautious of a downward correction. Particularly as markets expect the Federal Reserve to turn hawkish over the remainder of 2026.

Meanwhile, the GBPCAD and GBPCHF are witnessing stronger buy signals and have a higher possibility of upward price movement.

Canadian Dollar - Lower Oil Prices Pressure the CAD

The Canadian Dollar has particularly come under pressure due to its correlation with oil prices. Crude Oil prices have fallen more than 16% in this market putting immense pressure on the CAD. Oil prices continue to decline on Monday as the US-Iran peace process progresses further.

A key new release for the Canadian Dollar will be this afternoon’s Consumer Price Index. Analysts expect the CPI to read 0.7%, higher than the previous month but not the highest this year. If the inflation figure reads higher the CAD may attempt a correction, however, a weaker figure could seriously pressure the CAD.

USDCAD is showing short-term momentum remaining slightly in favour of buyers. On the 1-minute chart, the pair continues producing quick swings while holding above nearby support levels. The 5-minute chart presents a more defined structure of higher highs and higher lows, indicating that buyers are retaining control despite resistance limiting stronger upside progress.

Meanwhile, the 15-minute chart shows the pair consolidating within a broader intraday trend, suggesting the market is assessing whether sufficient momentum exists for a continuation higher. Overall, the technical outlook remains cautiously bullish while USDCAD holds above its recent support zones. A break above resistance could encourage buyers, while a move below support would increase the risk of a deeper pullback.

The price of the USDCAD remains above all moving averages and seems very bullish. However, investors are cautious the price may be overstretched in the medium-term after increasing in value for 5 consecutive days and 4 consecutive weeks.

Key Takeaway Points:

• The British Pound leads currency gains as markets increasingly expect Prime Minister Keir Starmer's resignation as early as this morning.
• Andy Burnham becoming Prime Minister could trigger higher GBP volatility, especially if he replaces the current Chancellor.
• The Canadian Dollar remains under pressure from weaker economic data and lower oil prices. Markets turn their attention to today’s Canadian inflation.
• USDCAD remains bullish, though investors are cautious after five consecutive daily gains and four consecutive weekly gains.