- The market’s mood has again switched to risk-off, sending the sentiment-sensitive Guppy back into six-week lows.
- Japan inflation data late Thursday is the only meaningful data for the pair, and broader market sentiment will remain the pair’s primary driver.
The GBP/JPY is getting pummeled by reversing risk flows, with broader markets opting to pick up the Japanese Yen in favour of the Pound Sterling, which continues to get hampered by negative Brexit headlines.
Global markets took another step lower in Wednesday’s action as broader fears of rising trade tensions and growing potential for a worldwide growth slowdown is seeing the already-beleaguered Sterling getting taken down a further notch against the JPY. Brexit proposals between the EU and the UK remain far apart relative to each side’s respective goals, and the EU’s latest offer to UK Prime Minister Theresa May fell far short of expectations, attempting to strongarm the UK PM into a separate agreement on the Irish border dispute which remains unresolved; the solution is unlikely to see much play in the UK, where PM May is looking to have any agreement on Ireland’s border worked into the broader Brexit framework.
Thursday brings no notable economic data for the UK, however Japan will be seeing October’s Tokyo CPI reading late in the day at 23:30 GMT, which is expected to remain steady at 1%, but still far below the Bank of Japan’s (BoJ) desired 2% target.
GBP/JPY levels to watch
The Guppy is testing into a familiar support zone near 144.50, and a lack of meaningful bearish continuation could see the GBP/JPY make a late-stage recovery, but the 145.00 handle is beginning to look alarmingly out of reach as the pair slips towards 144.00 with a notable lack of support until September’s swing low of 142.55.
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