GBP/JPY: Trapped below 133 amid Brexit uncertainty, market’s wait-and-watch mood

• GBP/JPY refrains from rising past-six weeks’ high.
• UK PM keeps his Brexit pledge intact, expected to the election after Parliament resume.
• Traders await ECB, US consumer-centric data for fresh impulse.

Fresh challenges to soft Brexit, coupled with market’s wait-and-watch mood, restrict the GBP/JPY pair’s upside beyond 133.00 mark, as the quote flashes 132.86, on early Wednesday.

Having witnessed multiple failures in the United Kingdom’s (UK) House of Commons, which led to the Parliament’s prorogation till October 14, the Prime Minister (PM) Boris Johnson is likely softening his grip over the Northern Ireland Backstop. However, calls of his another attempt to gain support for re-election after the Parliament resume and firm pledge to leave the EU on October 31 keeps the hard Brexit risk alive.

On the other hand, market players are showing less interest in geopolitical headlines concerning the Middle East and North Korea ahead of the European Central Bank (ECB) meeting, the US Consumer Price Index (CPI) and Retail Sales.

Considering the latest downbeat activity numbers and inflation data from the regional economy, not to forget threats of the bloc’s recession, the ECB is more likely announce a dramatic move during this week’s monetary policy as being the second-last by the President Mario Draghi.

Following that, August month numbers for the US CPI and Retail Sales will be the key to watch. While the CPI might portray weak price pressure, Retail Sales is also likely to keep the global worries on the plate.

It should, however, be noted that optimism surrounding the US-China trade meeting, in October, still helps the bond yield to remain around a month’s high.

Technical Analysis

Buyers seek a sustained break of 133.00 in order aim for July 18 low of 133.85, failing to which can recall 132.20 and August 22 high near 130.70.