- GBP/JPY buyers shrug-off the UK’s political drama.
- Cross-party MPs prepare to challenge British PM’s prorogation of the Parliament after a long summer break.
- The UK PM readies to forgo parliamentary majority while Michael Gove firms odds of no-deal Brexit.
GBP/JPY seems to witness a month-start buying as it takes the bids to 129.00 during early Monday morning in Asia.
The pair traders seem to ignore recently negative headlines from the UK while nearly 1.0% drop of the S&P500 is also likely shrugged off.
Ever since the United Kingdom (UK) Prime Minister (PM) Boris Johnson managed to get the Queen’s support for proroguing the Parliaments, lawmakers at Britain keeps upping preparations to challenge the move terming it as the show of anti-democracy. Not only cross-party opposition members but some of the rebel Tories are also showing their discomfort and readiness to challenge the move during this week’s parliament session starting from Tuesday.
However, as per the Guardian, the PM Johnson recently showed readiness to sacrifice his own parliamentary majority and withdraw the whip from dozens of Conservative Members of the Parliaments (MPs) if they back plan to stop no-deal Brexit.
Elsewhere, the UK’s Chief Brexit planner, Michael Gove, ruled out speculations of food shortage in a case of no-deal Brexit while also firming odds that no law can stop a no-deal Brexit.
On the other hand, the BBC reports that the EU’s lead Brexit negotiator Michel Barnier reiterated the importance of Irish backstop in order to have any deal with the UK, which in turn lessens the chances of the UK-EU trade deal ahead of the October 31 Brexit deadline.
Trade sentiment is also under pressure amid the US-China trade war as new tariffs from the US gets activated at the start of September while comments from lead central bankers support further easy monetary policy.
At the data from, month-start Nikkei Manufacturing Purchasing Managers’ Index (PMI) for Japan and Markit Manufacturing PMI from the UK will be the immediate catalysts to watch. While Japan’s manufacturing gauge flashed a contraction indicating figure of 49.5 during July, the UK’s counterpart also remained well in the decline phase with 48.00.
Even if British manufacturing gauge is likely to recover to 48.4 from 48.00 in August, the figure will still be in the contraction region, which together with Brexit pessimism, can keep exerting downside pressure on the pair.
Technical Analysis
Unless rising back beyond 129.20, comprising three-week-old rising trend-line (previous support), prices are less likely to revisit the 21-day exponential moving average (EMA) level of 129.80 and 130.00. As a result, a downside move to 128.00 and then towards August month low near 126.50 can’t be ruled out.
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