UK leadership race and global PMIs

EUR/GBP => The pair falls towards 0.8650

BTC/USD => The cryptocurrency holds over 19k

USD/JPY => The pair rises to 149.00

Pound rises as Boris Johnson drops out of UK PM race

EUR/GBP rose 0.25% on Friday after the UK Conservative leadership contest started and after retail sales slumped by more than expected. Retail sales fell -1.4% MoM as shoppers reined in spending as the cost-of-living crisis worsened. Today the pair is falling as the pound strengthens as the focus remains on the leadership battle. Former Chancellor Rishi Sunak has formally declared that he is running for PM, which has pleased the markets, particularly as ex-PM Boris Johnson withdraws. In addition to the race for PMI, PMI data from the UK and Europe are expected to show that business activity contracted further in October. The eurozone is forecast to see the worst contraction, which could drag on the euro.

Where might the EUR/GBP price head to?

EUR/GBP trades in a holding pattern capped by the 20 sma at 0.8755 and by the 50 sma on the lower side at 0.8670. The RSI is neutral. This setup could lend itself to a breakout trade. Sellers could look for a move below 0.8670 to test 0.8580, last week’s low, with a move below here creating a lower low, potentially bringing 0.85 into target. Meanwhile, buyers could look for a rise over 0.8755 to create a higher high and potentially bring 0.8870, the October high, into play.

BTC/USD sees a quiet start to a busy week

After modest gains last week, BTC/USD is edging higher at the start of the week, holding over 19k, trading in lockstep with US equities which also rose. This week will test sentiment as nearly a third of S&P500 companies report earnings. Disappointing earnings could be an early sign of a recession, which could hit risk sentiment and knock any rebound. Before earnings ramp up on Tuesday, today sees the release of PMI data, considered a good gauge for business activity. In crypto news, Freeway, a crypto staking platform, has paused withdrawals, citing volatility in crypto and forex markets, sending its token into freefall. The Freeway token has fallen by 80%. While this wasn’t a significant or well-known project, it could unnerve the market, serving as a reminder of the insecurity.

USD/JPY steadies below 150.00 after intervention

USD/JPY fell 1.7% on Friday after an intervention from Japanese authorities and on rumors that the Federal Reserve could look to start slowing rate hikes from December. The yen received a boost from an expected $30 billion intervention after the yen weakened to 151.94, pulling the pair briefly to 144.50. Japan’s PM voiced support for the move over the weekend. This was the second intervention within a month, and authorities suggest that more could come. However, while the Fed-BoJ divergence continues, such interventions could have a limited impact going forwards. Attention is now turning toward US PMI data which is expected to show that business activity in the US slowed further in October. Weak growth business activity could pull the USD lower.

Support can be found at 145.50 (weekly low) and 144.90 (September high).

Resistance for the index can be seen at 150.000 (psychological level) and 151.94 (last week’s high).