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  • Lack of fresh momentum, promises from the UK PM candidates stopped the GBP/JPY pair further downside.
  • Markets remain cautious ahead of Japan’s Leading Economic Index and the key employment data from the US.
  • Concerns over the future of global monetary policy moves and Brexit exert downside pressure.

With the lack of fresh catalysts to drive the previous south-run, the GBP/JPY pair took a U-turn on Thursday after few upbeat promises from the UK PM hopefuls. However, cautious sentiment ahead of the key US employment data and doubts over the future central bank actions limit the pair’s moves around 135.61 during early Friday.

The PM hopefuls have been appearing at various political hustings while keeping the promise to leave the EU on or before October. However, the British Pound (GBP) buyers seem to have been cheering the front runner Boris Johnson’s offer for a lavish spending plan even after a no-deal Brexit.

The risk-tone becomes heavy off-late as sluggish macro data and absence of any trade positive news despite the US-China truce keep weighing over the broad optimism. The 10-year US treasury yield remains under 2.0% to 1.943% whereas the German bunds matched European Central Bank’s (ECB) deposit rate of -0.40% for the first time in history.

Looking forward, a preliminary reading of the May month Leading Economic Index from Japan will be the first data to watch ahead of keeping an eye over the UK housing market numbers and then moving towards the US jobs report.

The Japanese economic index is expected to decline to 95.7 from 95.9 whereas the UK Halifax House Price could improve to +5.9% from 5.2% prior on 3month to year basis. In the end, likely improvement in the US headline Nonfarm Payrolls and Average Hourly Earnings can trigger the mark risk-on.

Technical Analysis

The 135.77/82 horizontal resistance limits the upside since mid-June, the key upside barrier also includes 23.6%  Fibonacci  retracement of the latest downpour. In a case of the breakout, 50-HMA and late-June lows around 136.00 and 136.27 respectively should be watched carefully.

Alternatively, pair’s 135.44 and 135.28 can offer immediate supports ahead of dragging the quote to a latest low near 135.15. However, a downside below 135.15 might not refrain from recalling late-September 2016 high around 132.40.