Due to some political certainty following Boris Johnson's decision to rule himself out of contention for the position of Prime Minister, the British Pound is one of the few currencies that has not lost ground to the US Dollar recently.
At this point, Penny Mordaunt is the main rival for Rishi Sunak's position as the top candidate for the UK. Regardless of the winner, the economy will be difficult to navigate.
Even while Treasury yields declined on Friday and continued to decline through today's Asian session, the US dollar has gained elsewhere. Some of the language used by the Fed on Friday was perceived as being less extreme than before.
Market confidence seems to have been shaken by fears about growth to start the week, and Chinese President Xi Jinping doubled down by filling the leadership team with his own supporters.
This seems to have been taken as a continuance of lockdowns and a challenging regulatory landscape for businesses across numerous industries. The Hang Seng Index in Hong Kong took a beating, falling more than 5% at one point. Equities in Australia and Japan witnessed small advances.
Chinese GDP and industrial output data, which were reported today, came in at 3.9% and 6.3% respectively year-on-year through the end of September, above expectations in both cases. However, retail sales for the same period fell short of expectations, coming in at 2.5% instead of the expected 3.0%.
After the Bank of Japan appeared to have acted with certainty late on Friday and once more this morning in somewhat illiquid conditions, USD/JPY has seen a wild ride. Since Friday, it has fluctuated widely between 145.47 and 151.95.
While the Brent contract is just under US$ 93 barrel, the WTI futures contract is close to US$ 84.50 bbl. At the time of going to print, gold is trading close to US$ 1,670, stable for the day.
Today is PMI Monday, and following the release of the European figures, the US will learn what the purchasing managers there are saying about the state of the economy.
As it nears the top of the three-week range of 1.0924 - 1.1496, the GBP/USD has continued to hold onto recent gains. Potential break point resistance is located between 1.1405 and 1.1414 before the previous peak.
The recent lows of 1.1061, 1.0924, and 1.0354 may provide support on the downside.
Price is above the 10- and 21-day simple moving averages (SMA), but below the 55- and 100-day SMAs, suggesting that range trading conditions may continue to exist until the range is clearly broken.
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