The British pound fell in European trading on Wednesday against a basket of global currencies, extending losses for a second consecutive session against the U.S. dollar. The currency is now nearing a four-week low as heavy selling continued amid concerns over the UK’s financial stability.

The selloff in UK government bonds coincided with weakness across major sovereign debt markets, as investor focus remains fixed on rising debt levels.

Price Overview

• GBP/USD declined by more than 0.2% to $1.3359, down from the session’s opening at $1.3389, after recording a high of $1.3396.

• On Tuesday, the pound lost 1.1% against the dollar, marking its steepest daily drop since April 4, as heavy selling intensified on worries about the government’s ability to control the nation’s finances.

UK Bonds

The UK gilt market came under severe pressure, with 30-year borrowing costs rising to their highest level since 1998, leaving the pound under heavy downside pressure. The bond selloff mirrored moves in global markets, where concerns about elevated debt burdens dominated sentiment.

Starmer’s Changes

Prime Minister Keir Starmer appointed former Bank of England Deputy Governor Minouche Shafik as his chief economic adviser, in a move aimed at strengthening his economic credentials ahead of what is expected to be a highly challenging budget later this year.

The decision sparked political debate in the UK, with critics suggesting it undermines the standing of Chancellor Rachel Reeves within the government. Analysts noted that the reshuffle on Parliament’s first day back from summer recess sharpened focus on the economic challenges of high borrowing, slowing growth, and the highest inflation rate among G7 economies.

Market Commentary

• Ray Attrill, head of FX strategy at National Australia Bank, said: “The deterioration of public finances is essentially a European problem. France faces the same issues. They’ve been in the background for some time.”

• He added: “It likely resonates more in the UK because of the Liz Truss episode… Part of the concern is the upcoming autumn statement or budget.”

• Attrill continued: “At this stage, there’s a lack of market confidence that the government is ready to tackle the scale of the fiscal deficit and the rapid debt build-up effectively.”

• Mark Dowding, chief investment officer for fixed income at RBC BlueBay Asset Management, noted: “Everyone wants reassurance on the soundness of public finances, but with yields rising, the fiscal gap is only widening.”

• Nick Kennedy, FX strategist at Lloyds, added: “The UK has faced a precarious fiscal situation, and that will continue. Over the summer there was some risk in the interest rate market. Now investors want to extend that risk to the pound as well.”

The Japanese yen declined in Asian trading on Wednesday against a basket of major and minor currencies, extending losses for a fourth straight session against the U.S. dollar. The currency is now nearing a five-week low touched during Tuesday’s session, as political uncertainty in Japan—the world’s fourth-largest economy—continued to weigh.

Less hawkish comments from a Bank of Japan board member further reduced the likelihood of a rate hike before year-end, with investors awaiting stronger evidence on the path of policy normalization.

Price Overview

• USD/JPY rose about 0.4% to ¥148.92, up from the session’s opening at ¥148.36, after touching a low of ¥148.26.

• On Tuesday, the yen closed down 0.8% against the dollar, its third consecutive daily loss and the steepest decline since July 31, hitting a five-week low of ¥148.94 amid heavy selling pressure.

Political Uncertainty

Hiroshi Moriyama, secretary general of Japan’s ruling party and a close ally of Prime Minister Shigeru Ishiba, announced his resignation, deepening the political crisis and casting doubt over Ishiba’s future.

The development followed increased pressure on Ishiba after recent electoral losses, as calls for his resignation have intensified. So far, Ishiba has resisted stepping down. Analysts say Moriyama’s departure could weaken Ishiba’s internal support and increase the likelihood of further political pressure in the near term.

The situation has opened the door for Sanae Takaichi as a leading contender to succeed Ishiba. Known for her economic stance favoring persistently low interest rates, her potential leadership is seen as reinforcing expectations for a more accommodative monetary path.

Market Commentary

• Kit Juckes, chief FX strategist at Société Générale, said: “On the surface, political uncertainty, and the potential resignation of Prime Minister Shigeru Ishiba in the coming days or weeks, is weighing negatively on the yen.”

• Lee Hardman, senior currency analyst at MUFG, added: “The deepening political uncertainty is likely to remain a drag, while the lack of a strong hawkish signal from Deputy Governor Ryozo Himino on Tuesday will encourage speculators to rebuild short yen positions.”

Japanese Interest Rates

• Deputy Governor Ryozo Himino noted that the BoJ “should continue raising rates,” but emphasized that global economic uncertainty remains high, reducing the urgency to tighten borrowing costs.

• Board member Nakagawa warned of risks from trade policy and said he is awaiting the upcoming Tankan survey for clearer guidance on the normalization path.

• Markets currently price less than a 30% chance of a quarter-point hike at the September meeting.

Investors are closely monitoring upcoming data on inflation, unemployment, and wage growth in Japan, alongside further comments from BoJ officials, to reassess rate expectations.

Cryptocurrencies declined on Tuesday as risk appetite weakened amid rising bets on a Federal Reserve rate cut, alongside higher yields on U.S. Treasuries as well as European and U.K. government bonds.

The yield on the U.S. 10-year Treasury rose by 5.5 basis points to 4.281%, while the 30-year yield climbed 4.6 basis points to 4.964%.

This came after a U.S. federal appeals court ruled on Friday that most tariffs imposed by President Donald Trump were unlawful, adding further uncertainty to U.S. policy decisions.

On the data front, the U.S. ISM manufacturing PMI rose to 48.7 in August from 48.0 in July, though it remained below the 50 threshold separating expansion from contraction.

Investor focus now shifts to Friday’s U.S. nonfarm payrolls report for fresh signals on the labor market.

According to CME FedWatch, markets are pricing a 92% probability of a 25-basis-point rate cut by the Federal Reserve this month.

Ethereum

As of 20:54 GMT, Ethereum fell 2.1% on CoinMarketCap to $4,272.2.

Despite some fluctuations and recurring concerns about oversupply, the global bauxite market continues to grow steadily. Much of this expansion is driven by rising demand in the aluminum sector, particularly from the automotive, aviation, and renewable energy industries.

Around 60% of electric vehicle manufacturers and 70% of aerospace materials companies use aluminum in various forms. Moreover, about 85% of bauxite is consumed in alumina production. Given these dynamics, the global alumina and bauxite market is projected to grow from $84.51 billion in 2025 to $125.91 billion by 2033, representing a compound annual growth rate of 5.11%. This signals major investment opportunities but also the potential for volatility, according to MetalMiner’s weekly report on supply chain disruptions.

United States and China in a Race for Supplies

Industry analysts highlight a structural shift in the bauxite and aluminum market. While the United States is expanding its domestic mining capacity, China is tightening its grip on global bauxite resources.

China is the world’s largest aluminum producer, consuming more than 60% of globally traded bauxite, primarily sourced from Guinea and Australia. By contrast, the United States relies heavily on imports, with about 75% of its bauxite supply coming from overseas. With global demand for aluminum continuing to rise, Washington is now seeking to reduce its dependence on foreign supplies.

Historically, the United States and North America have relied on the Asia-Pacific region, which dominates the global market with 45% of reserves. However, Africa and the Middle East are also key players, with Guinea alone accounting for 24% of global reserves. While Australia leads in exports, China dominates refining, followed by Saudi Arabia and the UAE.

Guinea’s Recent Moves

In a decisive step to tighten control over its mineral resources, Guinea recently revoked a major concession from Guinea Alumina Corporation (GAC), a subsidiary of Emirates Global Aluminium (EGA), citing the company’s failure to build a promised alumina refinery. Under a presidential decree, exploitation rights at the Boké concession were transferred to a newly established state-owned entity, Nimba Mining Company, for 25 years.

GAC, which exported 18 million tons in 2024, plans to challenge the decision through international arbitration, calling the termination “unlawful.” Analysts warn this development could shift market dynamics, particularly for the United States, which partly depends on Guinean bauxite for its supply chain.

Fresh Investments

While the U.S. works to expand its domestic mining footprint, major players in the aluminum industry continue to invest in new capacity. Rio Tinto has committed $180 million to boost bauxite output at its Amrun mine in Queensland, Australia, with initial production expected in 2027 and full ramp-up by 2028.

Price Outlook

The relative stability in the bauxite and aluminum markets was reflected in steady global bauxite prices during Q2 2025, shaped by a mix of supply chain disruptions, environmental regulations, and strong demand from the aluminum sector.

In the U.S., prices held at around $82 per ton, supported by steady demand from smelters and refractory industries. However, reliance on imports and shipping delays have raised costs, while environmental regulations and labor shortages continue to weigh on mining operations. In China, prices climbed to $99 per ton on the back of robust industrial demand and domestic supply disruptions. At the same time, limited imports and delayed shipments from Southeast Asia and West Africa tightened supply.

With aluminum demand accelerating and countries such as the U.S. and Australia investing in strategic supply chains, the bauxite market appears set for long-term growth. Still, challenges remain, including environmental hurdles such as the costly disposal of “red mud,” which can raise operational expenses by up to 50%, alongside geopolitical risks that could trigger fresh price volatility.