- Sterling drops away against the Yen as risk appetite flips into reverse on trade war fears.
- BoE rate decision inbound later this week.
The GBP/JPY pair is backing down in Monday action, trading into a low for the day near 146.40 as risk appetite withers in the face of renewed trade tensions.
The US unveiled a list of tariffs targeting $50 billion in Chinese imports late last week, and China was quick to turn around with its own set of tariffs targeting $34 billion in US goods, and stress meters have hammered back into the red as markets brace for the ramp-up into a trade war between the world’s two largest economies.
Japan’s export growth accelerated to a four-month high and exports also cleared expectations, leaving Japan with a trade balance that shifted to a deficit of ¥578.3 billion, a significant jump over the forecast deficit of ¥235 billion.
On the Sterling side, the economic calendar is free and clear of any meaningful figures for the GBP for the first half of the week, but this Thursday brings the Bank of England’s (BoE) next rate decision, which is expected to remain steady at 0.5% for the time being, though market analysts are expecting a rate hike from the BoE by September.
GBP/JPY levels to watch
The pair has priced in a lower high after turning around from 148.10, and is geared to break into May’s lows from 143.20, though near-term support exists at last week’s low of 146.10.
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