Daily Forex Report 24-Oct-2022: GBP starts strong while USD dips and recovers against yen

Sterling posts gains against the G10 set on Sunak’s likely ascension

Volatility and gilt yields are two terms that don’t typically go together, but are unsurprisingly fitting now, given the ongoing parliamentary chaos.

Nonetheless, 10 year gilts pushed lower over the past week and GBP benefitted from it, with Monday morning’s cable performance trending in the right direction.

At the time of writing, the GBP/USD pair is changing hands at US$1.135, sparking hopes of a recovery to the US$1.14 price point.

Some recent gains, yet the pound remains in a long-tail downtrend – Source: capital.com

The EUR/GBP pair is sitting at 86.7p, having chopped back at the end of last week, while the pound has started the week with a strong gain on the Canadian dollar, Swiss franc and unsurprisingly the Japanese yen.

Confidence in the pound may be spurred by the likelihood of Rishi Sunak entering No. 10, thus making a delay to the next October 31 budget less likely.

The euro is buying a little over US$0.98 throughout Monday’s Asia trading hours, meaning no losses week-on-week, though a long-tail bear channel is likely to continue amid high inflation and the continental energy crisis.

The USD/JPY pair, having broken through the 150 yen barrier at the end of last week, has actually retraced and is sitting closer to 149.

Still a grim reading, but an apparent bond buying from the Bank of Japan offered some relief, though perhaps only short term, as the US dollar seems to be making gains on the one-hour chart.

USD dips and regains against the yen – Source: capital.com

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