The British pound fell to $1.342 on Monday, reversing part of last week’s 0.6% rally, as the dollar regained strength and renewed political turmoil in France unsettled European markets. The resignation of French Prime Minister Lecornu deepened the country’s crisis, with President Macron struggling to form a government capable of passing a deficit-cutting budget or maintaining a stable majority in parliament. At the same time, Japan’s surprise election of pro-stimulus lawmaker Sanae Takaichi as prime minister sparked expectations of higher government spending, lifting global yields and boosting the dollar. In the US, the prolonged federal government shutdown and uncertainty around the economic outlook reinforced market bets on further Fed rate cuts this year. Meanwhile, in the UK, the Bank of England has kept rates on hold, with investors not expecting cuts until 2026 as inflation remains stubbornly high, driven by persistent food, energy, and housing costs.