- GBP/JPY bounces off three-week lows amid increasing odds of a Brexit with the deal and/or Brexit extension.
- UK PM Johnson’s Brexit proposal gets wide support, EU response awaited.
- The EU stands ready to allow Brexit extension even if it’s not signed by the UK PM.
Be it a Brexit with deal or the October 31 deadline extension, the GBP/JPY pair benefits from the Brexit-positive headlines while recovering to 31.85 during the Asian session on Thursday.
The latest news reports suggest that the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson’s latest Brexit proposal to the EU gets wide support, including Democratic Unionist Party (DUP) and the Labour rebels, to pass through the House of Commons. Though, the European Union (EU) is still to provide details of its stand while staying ready to allow another Brexit extension by the October 19 even if British request doesn’t carry the Tory leader’s assent.
While both the cases seem positive for the British Pound (GBP), overall uncertainty surrounding the key departure as well as broad risk-off limits the pair’s gains.
Adding to the lack of momentum could be the traders’ wait for Tokyo open that will offer second-tier Japanese data including Jibun Bank Services Purchasing Managers’ Index (PMI), expected 52.8 versus 53.3 prior, for September month.
Moving on, the UK Services PMI for September, forecast 50.3 from 50.6 earlier, could decorate the economic calendar for the rest of the day while developments surrounding the Brexit and the latest US-EU trade tussle will keep traders entertained.
Technical analysis
Unless providing a daily closing below the 50-day simple moving average (SMA), near 131.15, prices are less likely to revisit late-August tops nearing 130.70. Though, 133.30/40 area, including 21-day SMA, and 134.00 could keep price advances in check.
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