GBP/JPY maintains its weekly bottom recovery moves from the previous day.
The EU and the UK have called a halt to the sausage war, and a Belfast court has backed the Northern Ireland protocol arrangements.
EU citizens jam application British portal for settled status as deadline stays intact, while the UK refreshes its 2021 high of covid infections.
Japan’s data was weaker than expected, according to BOE’s Bailey, while the UK PMI is looking for a boost.
As Tokyo markets open on Thursday, the GBP/JPY drops to an intraday low of 153.56, shattering the previous day’s rebound from a weekly low. The pair appears to be bearing the brunt of the coronavirus (COVID-19) and Brexit concerns while also paying attention to Japan statistics.
The Tankan Large Manufacturing Index in Japan fell from 15 to 14, vs 5 previously, while the Non-Manufacturing Index rose from -1 to +1. According to Reuters, “surging raw material costs are harming sentiment among several sectors,” according to an anonymous BOJ official.
On the other hand, the covid troubles continue to loom large in the Asia-Pacific area, putting the optimists to the test. “The Tokyo metropolitan administration on Wednesday reported 714 new daily coronavirus cases, suggesting a dramatic recovery in the 10 days since the capital departed a state of emergency and transitioned to quasi-emergency measures,” according to Japan’s Kyodo news. In other news, the UK reported the largest daily increase in covid cases in 2021, justifying the EU’s need that British passengers be quarantined. Despite this, according to The Times, the UK government plans to allow double-vaccinated people to travel freely.
When it comes to Brexit, the UK is sticking to its hard deadline of June 30th for European citizens who have not applied for settled status. The same clogged the application portal, forcing the authorities to keep millions of people waiting. Alternatively, by endorsing the existence of the Northern Ireland (NI) protocol, the Belfast court made the Brexit discussions between the UK and the European Union (EU) easier. The announcement that the UK and EU had agreed to a three-month extension to end the sausage war, as well as the German-UK agreement on the post-Brexit defense and foreign policy declaration, were all on the same page.
S&P 500 Futures gain 0.18 percent intraday amid these moves, but US 10-year Treasury rates jump 2.8 basis points (bps) to 1.47 percent, providing contradictory signals for GBP/JPY traders.
The final reading of UK activity statistics for June, as well as remarks from BOE Governor Andrew Bailey, will be significant for short-term GBP/JPY movements. If Bailey supports Haldane’s recent hawkish views, the pair may be able to reverse the recent decline. Covid and Brexit headlines, on the other hand, are worth keeping an eye on since they can lead to unexpected outcomes.
The failure to cross the 50-day moving average of 153.75 has dragged the GBP/JPY to a weekly low near 152.60, but the 100-day moving average of 151.92 may limit the quote’s further weakening./nRead More