All Eyes on the Pound’s Direction Following the Election of a New Prime Minister, Which Triggered a “Congratulations Rally”

All Eyes on the Pound’s Direction Following the Election of a New Prime Minister, Which Triggered a “Congratulations Rally”

07.09.2022

In U.S. currency markets the previous day, the Dollar Index surged to 110.5, making the U.S. dollar the strongest currency. The AUD/USD pair fell from 0.6830 to 0.6728.It continues to test lower levels during today’s Asian trading session. In addition to WTI crude oil falling to $85.6, the daily RSI for the AUD/USD pair has not yet reached 30, indicating there is still room to fall, so traders should be cautious of further declines.

European currencies saw the pound rally on the back of the election of the UK’s new Prime Minister, Ms. Truss, the day before yesterday. Combined with a weaker yen, the GBP/JPY pair rose by 3.3 yen in a single day.During today’s Asian trading session, the pair hit a new high, touching 165.251. GBP/JPY temporarily fell by about 100 pips but subsequently recovered. It is currently trading at 164.682. However, as the hourly chart is showing signs of forming a triple top, traders should be wary of a short-term decline.

Today’s schedule includes German industrial production and UK Halifax house prices at 15:00; Eurozone Q2 GDP and remarks by BOE Governor Bailey at 18:00; the U.S. MBA Mortgage Applications Index at 20:00; the U.S. trade balance at 21:30;Canada’s trade balance; at 22:00, remarks by U.S. Richmond Fed President Barkin; at 23:00, the Bank of Canada’s policy rate decision and statement, Canada’s Ivey Purchasing Managers’ Index, and remarks by U.S. Cleveland Fed President Mester;Cleveland Fed President Mester’s remarks, 25:40 U.S. Fed Vice Chair Brainard’s remarks, 27:00 U.S. Beige Book, and U.S. Fed Vice Chair Barr’s remarks are scheduled. We will be watching the direction of the pound, which has seen a rally on the back of the new prime minister’s election.