What We're Tracking

Talks on a U.S.-Iran peace deal continue. Over the next week, the United States and Iran will continue negotiations on a memorandum of understanding to end their ongoing conflict, but a near-term diplomatic breakthrough that results in the signing of a finalized deal remains unlikely. Despite reports that recent discussions have narrowed remaining gaps, significant friction persists over the release of frozen Iranian assets, the sequencing of events and the reopening of the Strait of Hormuz. This will, in turn, sustain the risk of more sporadic U.S.-Iran military clashes over the coming week, as well as of Iranian strikes on commercial shipping near Hormuz. Even so, Gulf countries will likely urge the United States to refrain from a major escalation to avoid Iranian retaliatory strikes against their infrastructure. 

European Parliament votes on the EU-U.S. trade deal. On June 16, the European Parliament will vote on legislation to implement the July 2025 EU-U.S. trade framework. This comes after the international trade committee approved a compromise on June 2 that overhauls the supranational legislature's original automatic safeguards, including a sunrise clause withholding EU tariff cuts pending U.S. steel tariff reductions and a 2028 sunset clause. The revised framework replaces these with a conditional suspension mechanism allowing the European Commission to withdraw EU concessions if the United States fails to cut steel and aluminum tariffs by the end of 2026, with the overall framework expiring in 2029 absent new legislation. Ratification would head off a threatened increase in U.S. tariffs on EU-built cars and trucks from 15% to 25%, tied to a July 4 implementation deadline, though opposition from liberal and left-wing lawmakers in the European Parliament creates some uncertainty about the plenary vote's outcome. Failure would reopen the legislative process and likely trigger higher U.S. tariffs and EU retaliation. Even if ratified, unresolved U.S. complaints over EU digital and regulatory practices — alongside non-trade flashpoints, such as Greenland and Iran — could still reignite transatlantic friction.

U.K.'s Makersfield holds by-election that could trigger a Labour leadership challenge. The U.K. region of Makerfield will hold a major by-election on June 18, in which Greater Manchester Mayor Andy Burnham of the Labour Party is polling around 10 points ahead of the far-right Reform UK party's candidate, Robert Kenyon. If Burnham wins, he will likely challenge Prime Minister Keir Starmer for the Labour leadership shortly after, opening a contest that could generate weeks of political and market uncertainty. Should Starmer resign and no rival secure the 81 parliamentary nominations needed to trigger a full contest, Burnham could be confirmed within days. However, former Health Secretary Wes Streeting's stated intention to also stand, along with the possibility that Starmer remains in the race, suggests a drawn-out contest that lasts several weeks or even months. Any successor would likely preserve broad fiscal discipline, with differences confined to pace and composition: Burnham would tilt toward greater redistribution and green investment, while Streeting would prioritize predictability and stick closer to Starmer's course. Defense, NATO alignment and Labour's EU reset are unlikely to shift significantly under either scenario.

France hosts G7 Summit. French President Emmanuel Macron will host G7 leaders in Evian-les-Bains on June 15-17, amid compounding geopolitical and economic pressures. The U.S.-Iran war and the closure of the Strait of Hormuz will drive discussions, with U.S. President Donald Trump's willingness to engage constructively depending heavily on whether an interim ceasefire deal is secured and maintained beforehand; absent one, he is more likely to use the gathering to press allies over what he views as insufficient support in the Gulf. Ukrainian President Volodymyr Zelensky, who will attend as an invited guest, will also press for stronger air defense support and tighter sanctions against Russia, seeking to refocus allied attention on Ukraine as the Iran conflict has drawn the United States' attention elsewhere. France has also extended invitations to Saudi Arabia, United Arab Emirates, Qatar and Egypt for a Middle East session, and to Brazil, India, South Korea and Kenya for talks on global trade imbalances centered on China's overcapacity and reducing strategic dependencies on Beijing. The summit is unlikely to produce major breakthroughs, with Paris opting for narrower joint statements over a sweeping communique. With substantive deliverables unlikely, success will instead be measured by whether G7 leaders can project a minimum level of cohesion on a crowded, volatile agenda.

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