- GBP/JPY aims to break the short-term trading range of 136.96 to 137.33.
- The UK announces some more steps to ease lockdown restrictions, Britain-Japan early trade deal.
- Tories reiterate opposition to extend Brexit deadline, defies fears of a no-deal departure from the EU.
- The pre-Fed inactivity could gain support form a lack of major data/events.
GBP/JPY drops to 137.08 during the initial hour of Tokyo open on Wednesday. In doing so, the pair aims to break nearly 40 pips of the trading range established since the mid-US session of the previous day amid mildly risk-averse markets.
While the cautious trading sentiment ahead of the US Federal Reserve exerts the downside pressure on the pair, a light calendar also plays its role to weigh on the USD/JPY quotes. Additionally, comments from Japan’s Foreign Minister, suggesting no opening of borders with China anytime soon, becomes an extra negative for the risks.
As a result, the US 10-year Treasury yields stay downbeat around 0.83% whereas Japan’s NIKKEI prints 0.30% loss to 23,020 by the press time.
Elsewhere, the UK and Japan are yet to convey the progress during the first day of the post-Brexit trade deal negotiations. Though the Business Times quotes Tokyo officials saying that Japan and Britain are aiming for the early trade deal. It should also be noted that the UK’s ruling Tory party member again spoke in favor to maintain their opposition for no Brexit deadline extension beyond December 31, 2020, during the parliament.
On a different note, the UK’s Business Secretary Alok Sharma announced All non-essential shops will be allowed to reopen in England on Monday.
Moving traders may keep eyes on the market’s risk-tone sentiment for immediate direction. It’s worth mentioning that the BBC’s Nick Eardley tweeted that the UK PM Boris Johnson will update on easing of lockdown in England on Wednesday and the news concerning the event can also offer intermediate entertainment to the pair traders.
Technical analysis
The pair’s break below 200-day SMA, currently near 137.60, seems to drag it towards a 100-day SMA level of 135.85. Alternatively, 138.70 can offer an extra upside barrier during the quote’s recovery beyond 200-day SMA.
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