GBP/JPY retraces from 8-day high amid risk reset

• GBP/JPY fails to cheer optimism surrounding UK politics, US-China phase one deal.
• Protests in Hong Kong, US-Iran tension keep market fears alive.

Increasing optimism surrounding the Conservatives’ victory in the UK’s December election, coupled with positive headlines from the US-China trade front, falls short of ignoring market’s fear emanating from the Hong Kong protests and tension between Iran and the United States (US). With this, the GBP/JPY pair steps back from multi-day high to 140.45 by the press time of Monday’s Asian session.

Given the Brexit Party leader Nigel Farage’s announcement to take down 43 additional candidates from the constituencies where Labour won, odds of the Tory leadership after December election has rallied. The latest polls show more than 40% surveyors supporting the fact. In addition to reducing political uncertainty at home, Tory leadership could also end Brexit dilemma, as cited by Reuters while relying on the extracts of Prime Minister (PM) Boris Johnson’s speech in today’s CBI event.

Even so, the pair traders are challenged on the geopolitical grounds as protests in Hong Kong turn a week old and the United States (US) criticizes Iran of supporting terrorism while developing nuclear weapons and missiles, as per the Sky News.

On the contrary, trade positive headlines from the US and China, coupled with the cancellation of the US-South Korean military exercise to entice North Korea back to the negotiation table, as said by China’s Xinhua, challenge the risk aversion.

That said, the US 10-year treasury yields stop the recent upside to 1.82% while S&P 500 Futures seesaw around -0.10% area by the press time.

Looking forward, a lack of major data/events on the economic calendar could keep traders concentrated on trade/Brexit/geopolitical headlines for near-term direction.

Technical Analysis

Despite the recent pullback, the quote holds the break of the monthly trend line, at 140.20 now, which in turn portrays its strength to challenge October month high of 141.51.