- Sterling remains chained down by Brexit fears and uninspiring economic data.
- Broader market concerns on trade wars sees the JPY remaining a popular choice for the risk averse.
The GBP/JPY pair is trading into 140.30 in early Thursday’s market action after the Pound sunk to a fresh 12-month low against the safe-haven Yen of 139.90 on Wednesday.
The UK’s CPI figures yesterday came in at expectations with the y/y figure for July printing at 2.5%, but broader markets seemed to be hoping for more and the GBP waffled, stumbling against the Japanese Yen as Brexit fears are slowly grinding away at what’s left of confidence in the Sterling.
The GBP is continuing under pressure after Japan’s Merchandise Trade Balance sharply contracted into a deficit of ¥-231.2 billion, far below the forecast ¥-50.0 and a steep reversal of the previous period’s surplus of ¥720.8 billion. A boost in imports is largely to blame for the off-balance trade deficit as trade tariffs from the US begin to take their toll on global markets.
Thursday brings Retail Sales data for the UK at 08:30 GMT, and markets are hoping for a 0.2% rebound in the m/m July numbers versus June’s -0.5% slump.
GBP/JPY levels to watch
Current support is thin at the current low of 139.40, and bulls are going to be trapped by resistance from the current week’s high at 142.45 and August’s peak far above at 147.15.
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