- GBP/JPY remains sluggish for the third consecutive day.
- Doubts over Britain’s June 21 deadline to unlock, pre-data caution weigh on sentiment.
- Brexit jitters magnify ahead of US President Biden’s visit, EU warns UK over NI.
- Japan’s Q1 GDP, risk catalysts are the key to watch.
GBP/JPY trades sidelined around 155.00 following two-day declines amid the initial Asian session trading on Tuesday. The cross-currency pair justifies the confusion over the UK’s final step towards removing the virus-led activity restrictions as well as cautious mood ahead of important data from Japan.
The pair dropped during the last two days as the Japanese Yen (JPY) benefited from the market’s indecision over the US Federal Reserve’s (Fed) next move. Also favoring the Asian currency could be the broad criticism over Japanese Prime Minister Yoshihide Suga over the handing of the pandemic and holding of Olympics at home when over either prefecture are witnessing the covid emergencies.
On the other hand, UK PM Boris Johnson’s spokesperson signaled no doubts over the unlock but Cabinet Ministers are divided over removing the virus-led activity restrictions amid fears of covid strains and a large part of the over 50s left for final vaccinations.
It’s worth noting that the Brexit woes also weigh on the GBP/JPY prices as US President Joe Biden recently chose to meddle in the EU-UK tussles over the Northern Ireland (NI) protocol. Following the confirmation, the European Union (EU) gained confidence and warned Britain to levy harsh economic sanctions if it chooses to reject the previously agreed Brexit terms.
Amid these plays, US stock futures seem indecisive after a sluggish day on Wall Street whereas the Treasury yields are also waiting for clear direction following the downbeat performance in the recent days.
Moving on, Japan’s Q1 GDP, expected -1.2% versus -1.3% QoQ, will become important data for GBP/JPY traders. However, risk-related headlines gain major attention.
Technical analysis
Unless breaking an ascending trend line from December 21, 2020, near 153.50, GBP/JPY bulls remain hopeful. On the contrary, an upside clearance of 155.60 will confirm the short-term bullish flag chart pattern and favor optimistic traders to aim for the fresh multi-month high beyond the 156.00 threshold.
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