FOREX-Dollar edges up after US-Iran talks, pound choppy on Starmer exit

The US dollar rose 0.06% to 100.90, while the pound rebounded after British Prime Minister Keir Starmer announced his resignation, causing choppy trading.

The dollar ‌climbed ​on Monday as the first round of U.S.-Iran talks buoyed optimism for a peace deal while the pound was higher in choppy trading after British Prime Minister Keir Starmer announced that he would resign.

U.S. Vice President JD Vance ‌said talks with Iranian officials in Switzerland had laid a "good foundation" for a final peace deal, despite tensions over the Strait of Hormuz and Lebanon. U.S. crude fell 2.61% to $74.60 a barrel and Brent fell to $77.98 per barrel, down 3.21% on the day, although declines were held in check after threats from U.S. President Donald Trump ‌to restart the war and Tehran's announcement that it had closed the Strait of Hormuz.

The dollar index, which measures the greenback against a basket ‌of currencies, rose 0.06% to 100.90, with the euro down 0.24% at $1.1444. POUND RECOVERS AS POLITICAL UNCERTAINTY LOOMS

Sterling bounced back from a session low of $1.318 hit after Labour leader Starmer said he would resign, setting the stage for rival Andy Burnham to possibly become the country's seventh prime minister in the 10 years since the Brexit vote. "My sense would be something like the ⁠bond market ​vigilantes ... are probably a guardrail against ⁠a shift too far to the left by the next UK government," Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York, said.

"There'll be a contest, but the ⁠bond market will really be what people will be watching to see the credibility of the new government." Sterling was last up 0.12% to $1.3248.

YEN NEAR 40-YEAR LOW Against the Japanese yen, ​the dollar softened 0.02% to 161.32 after hitting 161.92, just shy of a two-year low reached last week. A break above 161.96 would ⁠take the yen to its weakest level since 1986.

The Japanese currency saw several sharp moves that saw the yen briefly strengthen against the greenback. After the Bank of Japan raised rates last week ⁠in ​a widely expected move, Japanese Finance Minister Satsuki Katayama said on Monday that authorities were prepared to respond appropriately to currency moves at any time. The yen has erased gains made after a round of interventions from April 30, with a shift in focus by the Federal Reserve leading traders to boost ⁠expectations for rate increases this year, which has favored the dollar. "People should be on guard for BOJ intervention and maybe even supportive comments from the U.S.," ⁠Chandler said. Both Deutsche Bank and BofA ⁠Global Research adjusted their forecasts for the Fed on Monday to include rate hikes in September, with BofA expecting the central bank to raise rates by 25 basis points each in September, October and December.