Sterling staged a strong rally to hit a fresh one-week high against the dollar during today’s European session, peaking at $1.3186. The pound made a notable move higher against the yen, gaining 3 percent to touch a session high of 137.76 yen. The relief rally was mostly politically-driven and not based on fundamentals, as the pound was boosted by news of the announcement of a replacement for David Cameron. By Wednesday night, Theresa May will be the new Prime Minister and this reduced political uncertainty in the UK has resulted in giving sterling a boost.

The Bank of England meets on Thursday and if they ease policy aggressively in response to the Brexit fall out, this could send the pound lower again. Some analysts predict the Bank cutting its benchmark rate by 25 basis points at this week’s meeting, the first policy meeting since the EU referendum.

BoE Governor Mark Carney spoke at the UK Treasury Select Committee today to testify on the Bank’s Financial Stability Report. He did not specifically talk about interest rates as the main focus of the hearing was on the BoE’s report published in May that said leaving the EU could push the UK economy into recession. Carney defended the Bank’s role in warning of the risks of a Brexit vote.

The euro strengthened against the dollar to briefly enter the $1.11 handle during the European session before easing to $1.1080. Recent moves in the single currency were mainly based on market sentiment. Eurozone data today consisted of German CPI which was finalized at 0.1% month-on-month in June and unchanged from the preliminary reading.

The yen weakened for a second consecutive day on the back of selling pressure driven by expectations of further stimulus measures in Japan. Japanese Prime Minister Shinzo Abe pledged he would take measures to fight deflation after his coalition party won the Upper House elections last weekend.

The dollar/yen pair rose into the 104 yen handle to reach its highest in over 2 weeks at 104.65 yen.

US oil prices rebounded from a 2-month low to reach $46.21 a barrel while Brent crude rose to $47.95.

The JOLTS data out of the US indicated job openings slipped in May. The monthly report showed there were 5.5 million job openings in May, down from 5.79 million job openings in April.