- GBP/JPY pulls back from late-May highs after the EU-UK agreement on Brexit deal propelled the quote.
- The Pound traders await Saturday’s Parliamentary session in the UK for fresh Brexit signals.
- Japan’s inflation numbers can offer immediate directions.
With a few Brexit headlines giving rise to the pair’s retracement from multi-month high, GBP/JPY declines to 139.85 during Friday’s initial Asian session.
News that the Democratic Unionist Party (DUP) stands firm to reject the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson’s Brexit proposal in Saturday’s special parliament meeting initially dragged the British Pound (GBP) on Thursday. However, the declines reversed after the European Council President Donald Tusk agreed to the UK PM’s Brexit deal.
Though, there has been a little development afterward and the same triggered the profit-booking moves ahead of Japan’s National Consumer Price Index (CPI) and Core CPI data. The market expects an increase of 0.1% in the headlines CPI figure, to 0.4% from 0.3% on a yearly basis, contrasting with the slump of 0.2% in the CPI ex-Fresh Food (YoY) numbers.
It should, however, be noted that major attention will be given to the Saturday’s parliamentary session at the UK where the fate of the PM Johnson’s Brexit deal will be sealed. “The key focus for Brexit now is Saturday’s emergency session in parliament where there will be a meaningful vote on the Johnson deal. But the PM is in a weak position. He needs 320 votes but there are only 287 Conservative MPs. The key Northern Ireland party (DUP), which Johnson needs, said it won’t vote for the deal. Some opposition MPs may well support the deal, but the vote will be close,” says the Australia and New Zealand (ANZ) Bank.
Elsewhere, trade headlines are also upbeat with Chinese Commerce Ministry showing readiness to tame the trade war while the White House Economic Adviser Larry Kudlow said that lots of momentum to complete US-China agreement.
Technical Analysis
Unless declining below 200-day Simple Moving Average (SMA) level of 138.73, prices are likely to again confront 141.00, 141.70 and 143.80 during further upside. In a case of sustained declines below 138.73, July month high nearing 137.80 and September tops surrounding 135.75/70 will come back to the chart.
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