After a three-day slump, the GBP/JPY is fluctuating near the weekly low.
The UK faces a GBP3.5 billion deficit in the Brexit divorce settlement, and EU Commissioner von der Leyen will visit Northern Ireland to discuss the protocol issue.
Johnson, the Prime Minister of the United Kingdom, supports Unlock on July 19th. Despite six months of elevated infection levels, Tokyo’s daily count has risen to levels seen in January.
The Bank of Japan is anticipated to maintain its monetary policy constant, thus the economy will be the deciding factor.
GBP/JPY bears take a respite at 152.00, with the pair up 0.05 percent intraday near 151.90 by Friday’s Asian session press time. Last week, the cross-currency pair fell for three days in a row as the market’s risk-off mood pushed the Japanese yen lower as a safe-haven bid (JPY).
As virus fears continue to stifle confidence, trading sentiment remains gloomy. According to Kyodo News, the UK recorded almost 50,000 cases, matching the greatest levels of infection since January, while Tokyo recorded 1,308 cases, matching the January 21 highs. Nonetheless, according to the Independent, UK Prime Minister Boris Johnson stated that the worst of the pandemic has passed.
Aside from covid fears, the GBP/JPY exchange rate is also influenced by Brexit woes. While lingering questions over the Northern Ireland (NI) protocol and fisheries remain unanswered, the UK diplomats’ estimation of the post-Brexit financial settlement’s current worth of around GBP37.3 billion raises another struggle between the EU and the UK. It’s worth noting that European Commission President Ursula von der Leyen will travel to Dublin on Friday to meet with Irish Taoiseach Micheal Martin to address a variety of matters, including the Northern Ireland Protocol. It’s worth noting that a report from The Times, indicating UK Prime Minister Boris Johnson’s backing for a new tax system to pay for social-care reforms, has added to the pair traders’ concerns.
Furthermore, the quote is weighed down by recent US-China tensions as well as the pair traders’ cautious attitude during the pre-BOJ period. Recently, Reuters reported on additional US penalties against Chinese diplomats, while the Financial Times (FT) highlighted the Sino-American squabbles by citing Beijing’s denial of a Sino-American diplomat meeting.
Alternatively, according to FT news, the UK’s House of Lords’ push to the Bank of England (BOE) to contain inflation appears to have put a ceiling on the lows.
On the statistical front, the United Kingdom had a higher Unemployment Rate for the three months ending in May, as well as a slower decline in the Claimant Count Change than the day before. Prior to then, inflation data supported the need for a hawkish BOE.
Stock futures and US Treasury yields continue under pressure as a result of these maneuvers.
As a result, GBP/JPY traders will keep an eye on the Bank of Japan (BOJ) meeting for fresh impetus, but risk catalysts will be the most important thing to watch. The probable status quo of the BOJ requires pair buyers to keep an eye on the nuances of the economic outlook for additional support.
Read: BOJ Sneak Peek: On a lowered outlook and a frightening viral situation, the yen has leeway to (temporarily) decline.
Although a sluggish RSI and an upward sloping Momentum line signal a corrective drop in GBP/JPY prices, the 100-day moving average (DMA) level of 152.46 becomes a major nearby hurdle to observe. A dropping trend line from June 21 near 150.40, on the other hand, may entice sellers./n
