GBP: The notable underperformer to begin the week, down 0.9%. Political uncertainty has set the underlying negative tone for GBP with tensions in the cabinet. The conflict is clear, with PM May’s allies coming out and accusing FM Johnson of ‘posturing’ in order to boost his profile, resulting in some ministers calling for May to sack Johnson. The unrest in the UK conservative party continues to concern markets, with GBP losing ground against its major pairs, in which GBP/USD tripped through 1.33. Subdued UK Mfg. PMI also provided headwinds for GBP while IHS Markit noted that input price inflation rose to 6-month highs. Near term support looks to be situated at 1.32.
EUR: Another political wobble in Europe amid the political unrest seen in Catalonia over the weekend. The Catalan regional government head stated that the Catalan citizens had won the right to independence after 89% voted for independence, yet Spanish PM Rajoy commented; stating that most Catalans did not want to participate in a referendum which was a strategy against legality and democracy, declaring only 44% on Catalonians turned up to vote. This subsequently pressured EUR throughout the morning, although the September lows printed last week (1.1717) have yet to be tested. Of note, large vanilla options (4bln worth) in pair at 1.1750-1.18 are set to roll off tomorrow.
USD: The greenback began the week on the front foot, with newsflow at the backend of last week regarding the potential replacement of Fed Chair Yellen, with some touting inflation hawk, Kevin Warsh as an early front-runner. This saw the USD gain against its major counterparts with US rates also ticking higher. Strong ISM Mfg. figures later in the session kept the USD bid with bulls looking for a break through 93.67 (September high), which would firmly indicate a reversal since bouncing off 93.00.