Theresa May is set to take over as UK Prime Minister today and the pound continues to regain lost ground against a number of peers on optimism of re found political stability ahead of Brexit talks with the European Union. Uncertainty remains in the foreground of market sentiment however, and the sterling depreciation is possibly far from over until more concrete information is known on how May will tackle such talks.

The Bank of England in fact is due to decrease interest rates by 25 basis points tomorrow as it tries to support and protect the British economy from negative impacts due to Brexit uncertainty.

The Eurozone, meanwhile, is fairly gaining market sentiment back, and was boosted yesterday with Italian banks rallying on Renzi’s announcement that an agreement with Europe was in the pipeline in supporting the Italian banking sector suffering from the burden of non-performing loans.

All is alive and kicking in the US this week, with the S&P 500 yesterday reaching its all-time high on continued confidence of an economic recovery and supportive unemployment claims and non-farm payrolls data that exceeded consensus expectations. Left to see, whether economists will revise Fed rate hike expectations further following yesterday’s jump up to 32.4% probability from 27% on Monday of a rate hike being seen by the end of the year.

Risk-on sentiment in fact seemed to resume yesterday, as markets rationally responded with outflows from Investment grade securities into equity and high yield assets. Investment grade securities were previously not selling-off proportionally to the increase in risky asset holdings.

US High Yield has substantially rebounded sell-offs and widening of spreads encountered towards the beginning of the year and continued supportive labour data, awaiting positive news in terms of wage growth, has the potential to see spreads tighten further, until action is taken by the Fed to hike interest rates further.

Caution will undoubtedly set the tone ahead of any future decisions by Janet Yellen. The US trades regularly with the UK with average yearly imports close to $53.6 billion since 2010, or close to 0.3% of total US GDP for year-end 2015. Albeit a small total figure, an ongoing relationship will undoubtedly want to be maintained going forward in ensuring the trade barriers between the two countries remain as flexible as possible.

In fact, despite warnings of demoting the UK to a lower ranking trading partner, there is a strong possibility the US reverts on their statement for trade and diplomatic reasons. There remains no further need for a US bluff on trading priority, given the UK went ahead and called it out, by still voting in favour of a Brexit. The US in fact now stands to gain from an enhanced UK trade deal, as the latter becomes free of certain trade pacts and commitments with the European Union.

Hence, at this point pressure is surely on the EU to get its reforms together and swiftly ensure its ongoing Quantitative easing measures are working, because the last thing it needs is falling down the trading rank with the UK and facing yet further headwinds in rediscovering economic growth.