FTSE 100 bounces back while GBP/USD, gold price hover above support

Macro Update

Euro falls to its weakest level since May 2025: Reports that Spanish officials were preparing for an early election heightened concerns over political and fiscal risks in the region, sending the shared currency down as much as 0.8% to $1.1161 against the dollar.

European bonds face renewed contagion fears: Investors remained cautious after last week’s sell-off revived memories of the region’s debt crisis 15 years ago. French government bonds continued to underperform as budget disputes and a closely contested 2027 election widened the spread over German debt.

Asian stocks lead global gains: Japan’s Nikkei 225 climbed 2.3% and the MSCI Asia Pacific index rose 1%, following a technology-driven rally on Wall Street that pushed the Nasdaq 100 to a record close on Friday.

Treasury yields ease slightly: Softer US employment data reduced pressure on the Federal Reserve to raise interest rates further, leaving the benchmark 10-year yield at 5.26%, while falling oil prices helped stabilise sentiment in bond markets.

Oil prices extend their retreat: Brent crude for December delivery fell 0.7% to around $101.50 a barrel after Saudi Arabia lowered the price of its benchmark crude for Asian buyers as supplies increased.

Brazilian assets surge after election surprise: A Brazil-focused exchange-traded fund listed in Japan jumped 7.6% and real futures advanced after Flávio Bolsonaro unexpectedly finished ahead of President Luiz Inácio Lula da Silva in the first round of the presidential election.

FTSE 100 tries to recover

The FTSE 100 tries to regain some of last week's sharp losses and has so far managed to heave itself above its 200-day simple moving average (SMA) at 10,474 which may now act as support.

Any recovery may encounter resistance between the 24 July low at 10,578 and the 10-to-15 September lows at 10,583-to-10,585.

Below the 200-day simple moving average (SMA) at 10,474 lies last week's low at 10,389 which represents key support.

Short-term outlook: bearish while below the 1 October high at 10,605

Medium-term outlook: neutral while above the 10,113 May low

FTSE 100 daily candlestick chart

GBP/USD remains above minor support

GBP/USD remains under pressure but so far holds above last week's low at $1.3181. If fallen through, the March-to-June lows at $1.3160-to-$1.3140 are likely to be reached next.

Minor resistance sits between the late July $1.3274 low and the 28 September high at $1.3280. The next higher 30 September high at $1.3311 would need to be exceeded for a bullish reversal to become possible.

Short-term outlook: bearish while below the 30 September high at $1.3311

Medium-term outlook: neutral with a bearish bias while trading within the March-to-September boundaries at $1.3676-to-$1.3140

GBP/USD daily candlestick chart

Gold weighs on support zone 

Spot gold's August-to-October decline remains in play even though the 2024-to-2026 uptrend line at $4,124.75 per troy ounce holds for now. As long as it and last week's low at $4,110.87 hold, further sideways trading may be seen.

Were a slip through the current September trough at $4,110.87 to ensue, major support consisting of the June-to-July lows at $3,996.06-to-$3,942.10 may be reached next.

Resistance above the $4,202.70 July peak comes in between the mid-September low, 30 September and 2 October highs at $4,219.41-to-$4,235.17.

Short-term outlook: bearish while below the 2 October high at $4,227.53

Medium-term outlook: bearish while below the 18 September high at $4,399.67, targeting the June-to-July lows at $3,996.06-to-$3,942.10

Gold daily candlestick chart