- GBP/JPY picks up bids after the worst weekly performance since late April.
- US President Biden to exert pressure on UK PM Johnson to break Brexit deadlock over Northern Ireland.
- Japan’s Olympic, Paralympic gains criticism at home and abroad amid covid woes.
- Tapering, virus concerns become the key amid a light calendar.
GBP/JPY begins the week on a positive side, up 0.10% intraday while picking up bids to 155.20, during the pre-Tokyo open trading on Monday. The cross-currency pair seems to struggles between Brexit woes and economic recovery hopes in the UK amid a quiet session. Also challenging the quote are mixed clues relating to the Fed’s next moves and the coronavirus (COVID-19) conditions in Japan and Britain.
While The Times came out with the headlines suggesting US President Joe Biden’s push to UK PM Boris Johnson over breaking the Northern Ireland impasse, the Financial Times (FT) highlights better prospects for low-paid workers in the UK.
US President Biden’s first European visit as the national leader becomes the much-eyed event of the week, at least for England as it seems, as the Democratic Party member is up for pushing UK PM Johnson to accept the Northern Ireland (NI) protocol agreed in the Brexit deal and break the multi-month-old deadlock with the European Union (EU). History suggests that the US intervention in the UK matters, especially relating to NI has solved the issue but Johnson has a reputation of renewing records, which in turn tests the GBP/JPY buyers.
On the other hand, the UK think-tank, Resolution Foundation said, per FT, “The prospects for low-paid workers are improving as the UK economy reopens, but a higher minimum wage will not be enough to secure their living standards.”
In the case of Japan, holding of the international games at home when the covid resurgence recalled emergency challenges the Prime Minister (PM) Yoshihide Suga-led government. Also, anticipated slow vaccinations and doubts over the economic strength keep the Japanese Yen (JPY) on the back foot.
Elsewhere, uncertainty over the US Federal Reserve’s (Fed) next move and mixed plays of the US jobs report versus reflation worries keep the risk-barometers, like US Treasury yields and the JPY, under pressure.
Amid these plays, S&P 500 Futures struggle for a clear direction whereas GBP/JPY traders should follow qualitative headlines for fresh impulse amid a light calendar.
Technical analysis
While the latest swing low and May 18 top restricts short-term GBP/JPY declines around 154.85-80, bulls need a clear break above the weekly resistance line past-155.65 to retake controls.
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