- GBP/JPY pauses for fresh clues after registering the worst daily losses of the year the previous day.
- Japan’s trade data came in mixed with higher exports, lesser imports and a better trade balance.
- UK CPI will decorate the economic calendar for now while trade/Brexit headlines will entertain markets.
GBP/JPY bounces off to 143.60 during Wednesday’s Asian session. That said, the pair earlier slumped on the hard Brexit fears while the recently mixed trade numbers from Japan seem to have a little impact on the pair.
Japan’s November month Merchandise Trade Balance came in beyond ¥-369 B forecast to ¥-82.1 B. Imports dropped below -12.7% expectations to -15.7% whereas Exports beat -8.6% market consensus with -7.9% level.
Earlier during the Asian session, global rating agency S&P upwardly revised its credit outlook for the UK. Among them, S&P sound optimism surrounding the Brexit while saying “UK’s conservative’s newfound majority should clear passage of withdrawal agreement bill through parliament, diminishing the risk of no-deal Brexit. The UK will ultimately seek an extension to the transition period beyond December 2020.” On the other hand, Fitch affirms the UK at ‘AA’ with the outlook being negative on the view that uncertainty regarding the future UK-EU relationship will persist for some time.
At the political front, the UK PM Boris Johnson has been highly criticized by the opposition Labour party for his bill to crash out of the EU by the end of 2020 as well as the formation of the new team that includes many of the old players. Further, the accusations of ignoring Islamophobia on Tories also crossed wires, via The Guardian, but were largely ignored.
Investors will now keep an eye over headline inflation numbers from the UK while risk-events likely the US-China trade and Brexit will keep the driver’s seat.
Technical Analysis
A 10-week-old rising trend line, at 143.45, offers immediate support to the pair, a break of which could recall October highs near 141.50. Meanwhile, 148.00 acts as the immediate key resistance.
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