[MARKET ANALYSIS] Sterling firms against EUR, weaker against Buck as Starmer appears on a firmer footing, risks remain into return of Parliament

G10s trade under a relatively strong USD, with recent upside in DXY as it vaulted the 100DMA at 98.45, and moves towards the 200DMA at 98.52. USD continues to be driven by oil/yields as geopolitics remain in focus. Today, US President Trump is expected to arrive in China for his summit with Xi, where talks are expected to take place on Thursday and Friday. No breakthrough is expected in US-China relations, though the situation in Iran will likely be one of the core topics, with some fearing an Iran-for-Taiwan bargain. (Full analysis at 06:50BST on the headline feed). The session also sees a number of Fed speakers: Collins (2028 voter, neutral) on the economic outlook, Kashkari (2026 voter, hawk) will participate in a moderated discussion, and Logan (2026, hawk) will also participate in a moderated discussion. GBP trades a touch lower against a strong buck, but stronger against the Euro despite continued political uncertainty. As it stands, the PM intends to stay in his post and run in any leadership contest against challengers (likely Streeting. Potentially, Miliband, Rayner, Carns, and/or Burnham). Theoretically, if a contest were to be triggered now, Starmer would be the favourite (100+ MPs back him, against c. 90 who have expressed no-confidence). Recent newsflow has been around a very brief Starmer-Streeting meeting. We are unlikely to see a readout due to the King's speech later today. In terms of timing, at 14:30 BST, two backbench (Junior) Labour MPs will ask "typically lighthearted" questions, according to Politico. Opposition leader Badenoch speaks third, then the PM will respond to her questions. EUR/GBP trades towards the lower end of Tuesday's 0.8653-0.8697 range, Cable continues to move lower as it did on Tuesday, currently supported by the 1.3530, with further support lower at 1.35, the previous session's low. Ultimately, any leadership change would likely be a shift to the left and therefore weigh on the Pound. MUFG wrote this morning, "We were already assuming EUR/GBP would drift higher to 0.8850 by year-end but if this uncertainty persists and we do see new leadership and a shift left in policy, higher levels through 0.9000 is possible." ING wrote "High yields are probably providing sterling with a little insulation at the moment, but we would expect good demand in EUR/GBP under 0.8650."