Sterling, Yen Slide Amid UK Debt, Japan Political Uncertainty

The British pound and Japanese yen have both fallen sharply due to escalating investor concerns about global government debt and political instability, particularly in the UK and Japan. Britain's 30-year borrowing costs have surged to their highest levels since 1998, intensifying fears about fiscal discipline ahead of the autumn budget, where tax increases are expected to meet fiscal targets. Japan's yen is under pressure amid political uncertainty following the resignation of a senior ruling party official and dovish signals from the Bank of Japan, prompting increased speculative short positions. These developments have strengthened the US dollar, supported by rising US Treasury yields and anticipation of key labor market data that could influence Federal Reserve interest rate decisions. The euro has gained modestly against both the pound and yen, reflecting relative stability in European finances despite ongoing concerns. Overall, mounting government deficits and political shifts are creating volatile currency and bond markets globally, with investors closely watching upcoming economic data for further cues.