- GBP/JPY wavers inside a 20-pip range after refreshing the highest level since April 2018 the previous day.
- Japan’s Tankan Large Manufacturing Index came in strong, Non-Manufacturing Index recovered in Q1 2020.
- UK stays tough on China, unlock optimism joins upbeat British GDP to favor the bulls.
- UK Manufacturing PMI will decorate calendar, hurdles for US President Biden’s infrastructure plan should be watched closely.
GBP/JPY picks up bids to 152.70, keeping the immediate trading range between 152.55 and 152.55, as markets in Tokyo open for Thursday. The pair recently ignored upbeat Japanese data while extending the latest recovery moves of sterling. However, cautious sentiment challenges the upside around multi-day high.
Japan’s Tankan Large Manufacturing Index for Q1 jumped past-0 forecast and -10 prior to +5 figure. Further, the Tankan Non-Manufacturing Index for the stated period recovered from -5 expected and previous readouts to -1.
However, the market’s disappointment from US President Joe Biden’s $2.25 trillion infrastructure plan, due to likely hurdles for the spending bill in the Senate, weighs on GBP/JPY.
Also on the negative side could be the US Trade Representative’s (USTR) readiness to battle China to open more sectors for the American business. Further, the UK’s criticism of Beijing and worsening virus conditions in Europe, not to forget fresh covid strain from Brazil, add to the risk-off mood.
However, recently upbeat global economics and vaccine news have been safeguarding the bulls. Additionally, the UK’s ability to ease virus-led lockdowns, backed-by a strong vaccination drive, adds to the market optimism.
Amid these plays, S&P 500 Futures print mild gains whereas the US 10-year Treasury yields pause around the highest levels since January 2020.
Looking forward, the final reading of the UK Manufacturing PMI, expected to confirm 57.9 figures, can entertain traders ahead of the US ISM Manufacturing PMI. Talking about the risks, the market’s reaction to the US spending plan and covid updates will be crucial.
Technical analysis
Although sellers are less likely to take the risk until GBP/JPY stays above March 18 top of 152.55, the 153.00 threshold tests bulls off-late.
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