Search ForexCrunch
  • US tariffs on China activated despite on-going trade talks, China said to retaliate.
  • The UK data might offer immediate moves ahead of the final trade negotiations.

With the US tariff hikes on China in effect despite open trade talks at Washington, GBP/JPY seesaws near 142.80 ahead of the UK markets open on Friday.

The quote slumped to the 12-week low on Thursday as risk tone remained heavy ahead of today’s final round of talks between the US and Chinese lawmakers.

Global risk barometer, the US treasury yield for a 10-year period, dropped nearly 3 basis points to 2.45% yesterday while being near that level by the press time.

Trade negotiations were halted without much information to begin on the next day during the Asian session. However, the US tariff increase on Chinese goods worth of $200 billion from 10% to 25% wasn’t stopped from coming into effect.

As the tariff hike came into effect, China quickly retaliated with statements like it would take countermeasures against the American move and hopes that the two sides can resolve the ongoing trade war through talks.

With this, risk-on crept in and favored the safe-haven demand of the Japanese Yen (JPY) while the British Pound (GBP) traders were waiting for first quarter (Q1) gross domestic product (GDP) and production numbers for March. The UK Q1 2019 GDP may increase to 0.5% from 0.2% on QoQ which can offer a yearly growth figure of 1.8% versus 1.4% prior. Further, manufacturing production could weaken to 0.2% from 0.9% and industrial production is likely softening to 0.1% against 0.6% previous readout.

As the talks are still to continue in today’s US session, risk-tone may remain heavy unless any positive news arrives.

Technical Analysis

Given the pair’s inability to remain strong, an upward sloping support-line stretched since late-January at 142.20 gains seller’s attention as a break of which can push bears toward 141.00.

Meanwhile, 143.25, 100-day simple moving average (SMA) level of 143.80 and 144.50 comprising 200-day SMA seem to cap the quote’s near-term advances.