Search ForexCrunch
  • GBP/JPY nears two weeks high.
  • Trade/Brexit optimism have been helping the pair off-late, FT pessimistic over UK growth.
  • Early month activity numbers will be watched for fresh impulse amid Japan off.

GBP/JPY remains modestly positive around 144 amid Thursday’s Asian session. The pair shows a less reaction to the upbeat signals from US-China trade and PBOC, while also ignores the Financial Times (FT) forecast, ahead of the British data.

Trade developments surrounding the US and China are on the fast-track as the US President Donald Trump confirmed signing in ceremony of the phase-one deal, on January 15. Additionally, his comments on phase-two and the back-up statements from the White House Adviser Peter Navarro signal all good as far as the trade relations between the key economies are concerned. Furthermore, risk sentiment should also be improved as China’s central bank announced 50 basis points (bps) of Reserve Requirement Ratio (RRR) and unleashed a flow of funds at home.

Even so, the pair is showing less reaction and the reason could be traced from the Financial Times (FT) headlines. The news report conveys that more than a third of the survey respondents believed that (Gross Domestic Product) GDP growth in 2020 would be no better than in 2019, which looks likely to be the worst performance in a decade.

Alternatively, the UK’s PM Boris Johnson sounds optimistic for the Brexit proceedings and its results while delivering the New Year message. “We can start a new chapter in the history of our country, in which we come together and move forward united, unleashing the enormous potential of the British people,” says the BBC while quoting the Tory leader’s message.

Markets will now wait for the UK Manufacturing PMI data for December. The activity number is likely to increase from 47.4 to 47.6 and can help the quote to take benefit of the recent trade positive news/headlines. However, a six-day off at Japan might restrict the pair’s reaction.

Technical Analysis

The December 16 low near 145.75 holds the key to pair’s rise towards 148.00 while 21-day SMA around 143.25 limits the pair’s immediate declines.