Indecisive around 153.00 ahead of UK GDP

  • GBP/JPY fades bounce off intraday low, snaps two-day recovery.
  • UK’s Javid confirms no need for fully vaccinated to isolate, virus woes continue.
  • Senior MEP hints final ultimatum over Brexit as the UK pushes for renegotiation.
  • Market sentiment dwindles amid light calendar, risk catalysts, UK data dump are the key.

GBP/JPY remains pressured around an intraday low of 153.02, down 0.03% so far during Thursday’s Asian session. In doing so, the quote portrays sluggish market conditions while also signaling traders’ indecision ahead of the key UK Q2 GDP data.

The recent hints of the US policymakers’ visit to their Chinese counterparts, initially for Treasury Secretary Janet Yellen before US Deputy Secretary of State Sherman, fail to favor the market bulls as the covid woes remain dominant. Also positive for the sentiment could be the UK Health Minister Sajid Javid’s confirmation that the fully-vaccinated British people above 18s need not self-isolate.

However, the five-month high death toll in Britain and Japan’s continuous struggle with the virus, amid multi-day high infections, challenge GBP/JPY optimists. Also challenging the pair were the risk of the European Union’s (EU) final ultimatum to the UK over the push to renegotiate Northern Ireland (NI) border, as hinted by The UK Express.

It’s worth noting that Japan’s Producer Price Index (PPI) for July recently jumped to 1.1% MoM and 5.5% YoY versus 0.5% and 5.0% respective expectations.

Amid these plays, S&P 500 Futures remain lackluster whereas the US 10-year Treasury yields and Japan’s Nikkei 225 print mild gains by the press time.

Given the sluggish day ahead of the UK data, GBP/JPY traders will keep their eyes on the monthly figures of GDP, Manufacturing Production and Industrial Production in addition to the preliminary readings of the second quarter (Q2) GDP.

“The market is forecasting a 4.8% gain for Q2 GDP, with a robust outlook ahead given the significant easing of restrictions in July. Ahead of the June update, the trade balance has begun to stabilize following a period of Covid/Brexit volatility,” said Westpac ahead of the data.

Should the scheduled figures match upbeat forecasts, calls of the BOE’s tapering regain life and may help the GBP/JPY bulls to cross the immediate hurdle to the north.

Technical analysis

Although a 17-day-old support line, near 153.00, stops GBP/JPY before directing to the 100-DMA level surrounding 152.75, 50-DMA near 153.10 and one-month-long horizontal hurdle close to 153.50 restricts short-term GBP/JPY upside.


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