• GBP/USD bulls move in at the start of the week in bullish gap. 
• Bulls eye the 1.1500 area for the days ahead.

GBP/USD starts where it left off the week, bid. The US dollar has been pressured following a report in the WSJ that said some Fed officials have signalled greater unease with big interest rate rises to fight inflation. In politics, UK Boris Johnson and Rishi Sunak did not strike a deal this weekend putting Sunak firmly on course for the leader. Cable has consequently penetrated a key resistance as follows:

GBP/USD daily chart

GBP/USD H4 chart

The price has carved a bullish scenario on the daily and 4-hour charts whereby a correction of the open could see support come in between 1.1300 and 1.1250. Resistance is marked just below 1.1400 which guards a break towards 1.1500 and early October highs.

• Gold price is advancing towards $1,660.0 amid an upbeat market mood.
• A Fed policymaker adopted a less-hawkish approach in a long time on interest rate guidance.
• The returns on 10-year US bonds have trimmed to 2.20% amid a decline in hawkish Fed bets.

Gold price (XAU/USD) is marching towards the immediate hurdle of $1,660.00 sharply as the positive market sentiment witnessed on Friday is expected to continue further. The precious metal picked significant bids around the two-year low at $1,614.85 and displayed a juggernaut rally, which may advance further.

The risk-on impulse shot vigorously after the Federal Reserve (Fed) policymaker supported a slowdown in the current pace of hiking interest rates to avoid sending the economy into an ‘unforced downturn’. San Francisco Fed President Mary Daly cited that too sharp increment in interest rates has trimmed the consensus for growth prospects. Therefore, a slowdown in the rate hike pace would lift some pressure on the economy. A less-hawkish commentary from a Fed policymaker in a very long time lifted the market sentiment and the S&P500 soared by more than 2.60%.

Meanwhile, the US dollar index (DXY) displayed a vertical fall and settled below the 112.00 cushion. The 10-year benchmark US Treasury yields declined to 4.20% as chances for a 75 basis point (bps) rate hike by the Fed have trimmed to 88%.

On Monday, investors will focus on the release of the S&P PMIs data. The Manufacturing PMI is expected to decline to 51.2 vs. the prior release of 52.0 while the Services PMI may drop to 49.2 from 49.3 reported earlier.

Gold technical analysis

Gold price has witnessed a stellar buying interest after testing the demand zone placed in a $1,614.85-1,621.60 range. The precious metal has crossed the 50-and 200-Exponential Moving Averages (EMAs) at $1,637.50 and $1,660.00 respectively in no time, which signals the strength of the gold bulls.

Also, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which indicates more upside ahead.

Gold hourly chart

UK's Boris Johnson and Rishi Sunak did not strike a deal this weekend. Johnson told his supporters this morning that he is the only candidate with a democratic mandate. Hesaid he wants to form a Government that will reach 'far and wide'.

Johnson says he hoped he, Sunak and Mordaunt could come together and unite but they have been unable to do so.

Johnson said he had the numbers (102). But he also said "you can't govern effectively unless you have a united party. 

This is a huge development and makes Rishi Sunak the firm favourite.

GBP/USD has gapped to a high of 1.1293 in the open.

• EUR/USD bulls emerge and eye a test of the coil's trendline.
• Bears need to get below hourly support around 0.9800.

Big moves in forex on Friday have put a bid into the euro. The US dollar index dropped as investors scaled back bets on aggressive monetary tightening after a WSJ report said that some Fed officials are concerned about overtightening with large rate hikes. Following Friday's volatility, the euro has moved out of bearish territory within the medium-term coil with prospects towards 0.99 for the days ahead as the following charts illustrate.

EUR/USD daily chart

Trendline resistance guards a break towards 1.0000 while the price embarks on the 0.9850 territories. 

EUR/USD H4 chart

Zoomed into the 4-hour charts, a correction could be at hand from which the bulls will need to commit from prior resistance near 0.98 the figure or face pressures to prior lows that guard a break of the coil's support between 0.9750 and 0.9700. 

EUR/USD H1 chart

From an hourly perspective, the 38.2% Fibonacci retracement of the bullish impulse aligns with 0.9800 resistance which could provide a firm support structure for the bulls in the upcoming sessions.  

• AUD/USD bulls move in, but bears are lurking. 
• Aussie CPI is on the radar for the week ahead.

AUD/USD rallied hard on Friday hitting a high of 0.6392 ending the day 1.59% in the green. The price has broken the technical structure but as investors fret about inflation and the economic effects of central bank's efforts to rein it in, there could be headwinds that put the downside back into focus. Meanwhile, Aussie data will be eyed this week with the Consumer POrice Index on the radar.

''We expect a more dovish headline CPI print due to the significant offset from the rebates and lower pump prices,'' analysts at TD Securities said. ''However, trimmed-mean CPI may stay elevated at 1.6% q/q as broader price pressures are still brewing, especially in the housing and food categories. Unless trimmed-mean inflation is strongly higher, we expect the Bank to stick with 25bps hikes until March 2023.''

US Treasury yields hit the pause button on Friday following suspected Bank of Japan intervention and signals that the Federal Reserve might consider less aggressive inflation-curbing tactics after November. This led to all three major US stocks to surge but more than 2%, notching their biggest Friday-to-Friday percentage gains since June, closing the book on a week marked by mixed earnings, soft economic data and political turmoil in Britain. 

The two-year yield slumped 12.7 basis points to 4.48% and the 10-year rate slipped less than a basis point to 4.22% after the WSJ published the fact that certain Federal Reserve officials are becoming uncomfortable with the speed of interest-rate hikes. The Fed has raised its target funds rate by 300 basis points since the policy tightening began this year. The probability of the Fed lifting rates in November by 75 basis points is 96.5%, according to the CME FedWatch Tool.

AUD/USD technical analysis

The price could be in for a correction but the focus is now on the daily resistance structure around 0.6450 so long as 0.6400 holds.