Can the new U.K. PM bring a bit of calm back to the markets?
And does this mean that Cable is finally bottoming out?
Before moving on, ICYMI, yesterday’s watchlist checked out NZD/USD’s rising channel ahead of the U.S. PMI releases. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Rishi Sunak to be U.K. Prime Minister, following Liz Truss resignation
U.S. flash services PMI slipped from 49.3 to 46.6 vs. 49.6 forecast
U.S. flash manufacturing PMI fell from 52.0 to 49.9 vs. 51.0 consensus
U.S. Treasury Secretary Yellen: Current priorities are tackling inflation and monitoring potential vulnerabilities in financial system
U.S. Treasury to take steps to strengthen resilience of debt market
PBoC set onshore yuan reference rate at record lows
China’s National Team intervenes in stock markets to stem decline
BOJ core CPI up from 1.9% to 2.0% y/y
Japanese PM Kishida says extra economic plan to be drafted by end of Oct
German Ifo business climate index unchanged at 84.3 vs. 83.4 forecast
U.K. bonds sustain rally as Sunak to be confirmed as PM
U.S. CB consumer confidence index at 2:00 pm GMT
U.S. Richmond manufacturing index at 2:00 pm GMT
FOMC member Waller’s speech at 5:55 pm GMT
Australian quarterly CPI at 12:30 am GMT (Oct. 26)
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What to Watch: GBP/USD
GBP/USD 1-hour Forex Chart
It ain’t looking so gloomy for the British pound these days!
The new PM in town appears to be bringing a bit of relief to the bond markets, as investors seem confident that economic stability might be restored under Sunak’s leadership.
Not only did Cable pop sharply higher off its triangle bottom, but the pair also gapped higher to test the resistance at the 1.1400 major psychological mark.
A bit more bullish energy might be needed to bust higher, though, as the pair is filling the gap and could still dip back to the bottom.
The moving averages are holding as dynamic support around the 1.1300 handle at the moment and might be enough to spur another test of resistance.
Meanwhile, economic data from the U.S. hasn’t been so upbeat, as the manufacturing and services PMIs tumbled sharply. Could this be enough to discourage the Fed from hiking aggressively again?
If traders think so, GBP/USD might be able to break above the triangle top and go for a rally that’s the same height as the chart pattern.
That’d be close to 500 pips, so y’all better not miss it!