- Fears of hard Brexit, pessimism surrounding the UK economy weigh on the British Pound (GBP).
- Renewed trade tension, sluggish macro data turn traders to risk-safety.
Following its heaviest slump in more than a month’s time, the GBP/JPY pair extended the south-run towards flashing a fresh 2-week low before taking the rounds to 135.72 during early Asian morning on Wednesday.
The British fundamentals have been flashing red signals off-late with headline manufacturing and construction activity gauges declining to multi-year lows.
Adding to the GBP weakness could be dovish statements from the Bank of England (BOE) Governor Mark Carney who cited downside risk due to trade tension, Brexit pessimism.
On the other hand, the US Trade Representative’s proposal to levy fresh tariffs on the EU’s $4 billion worth of goods becomes an extra player into the trade war zone.
Given the expectations of no chances in 51.00 mark of the UK Services Purchasing Managers’ Index (PMI) for June, investors might emphasize political/trade headlines for fresh direction.
Technical Analysis
Should prices slip beneath June month low of 135.37, September 2016 high near 132.45/50 and the current year low around 131.80 can become bears’ favorites. Alternatively, 136.60 and 21-day exponential moving average (21-D EMA) level of 137.00 may keep limiting the pair’s near-term upside.
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