Search ForexCrunch
  • GBP/JPY fails to respect Friday’s Doji formation as risk-tone sentiment gets heavy on virus 2.0 fears.
  • Expectations of UK PM Boris Johnson to offer autumn deadline to the EU gain dominance.
  • BOE is likely to announce an additional £150bn of stimulus on Thursday.
  • Japan’s Tertiary Industry Index, Brexit/virus updates will be the key to follow.

GBP/JPY bears the burden of the current risk-off mood while declining to 134.15, down 0.40% on a day, during Monday’s Asian session. Other than the increasing odds of the coronavirus (COVID-19) resurge, fears of another round of tough talks between the European Union (EU) and the UK PM Johnson also weigh on the pair. Additionally, odds that the BOE will unleash extra stimulus to combat the virus also spreads pessimism and drag the quote down under an ascending trend line from May 18.

The latest numbers from the US, Beijing and Tokyo have worrisome in that they suggest the risk of the COVID-19 return from which the market is yet to overcome. Also challenging the mood could be the comments from the World Health Organization’s Regional European Director Hans Kluge who urged the UK to not rush in easing lockdown restrictions.

Elsewhere, The Times came out with the news suggesting that the Bank of England (BOE) could add stimulus to its kitty. The new said, “the BOE is expected to unleash a further £150bn of stimulus in its latest attempt to cushion the economic damage from Covid-19 — as fresh evidence emerges of the rise in unemployment caused by the lockdown.”

On a different note, The Telegraph came out with the news suggesting that the UK PM Johnson could offer autumn deadline to the European leader for a deal. “The Prime Minister, his chief Brexit negotiator David Frost, and the Cabinet Office minister Michael Gove are due to hold “high-level talks” with Charles Michel, the President of the European Council, Ursula von der Leyen, the President of the European Commission, and David Sassoli, the President of the European Parliament,” said the news.

Amid these downbeat indicators, the market’s risk-tone remains heavy with the S&P 500 Futures and Japan’s NIKKEI flashing losses by the press time. Further, the US 10-year Treasury yields are also down over three basis points to 0.667% as we write.

Given the lack of major data on the cards, the GBP/JPY traders may keep eyes on the qualitative catalysts for immediate direction. Among them, Brexit might have a higher impact as being the major and an older issue looming over the UK policymakers.

Technical analysis

Considering the pair’s sustained trading below the short-term key support line, now resistance, coupled with the risk-off mood, sellers are likely to dominate for a while. In doing so, a 50-day SMA level of 133.60 seems to be the immediate support ahead of the early-May top near 133.15. On the upside, a clear break above 134.80 may aim for 00-day SMA near 135.60.

 

Expert score

5

Etoro - Best For Beginner & Experts

  • 0% Commission and No stamp Duty
  • Regulated by US,UK & International Stock
  • Copy Successfull Traders
Your capital is at risk.