Search ForexCrunch
  • GBP/JPY looks for clear direction while consolidating the previous day’s gains.
  • Market sentiment dwindles amid cautious optimism over Brexit, noise from US President Trump.
  • Recent Brexit chatters suggest the deal is imminent but nothing official.
  • BOJ’s Kuroda is up for speaking at the Meeting of Councillors of Nippon Keidanren in Tokyo.

GBP/JPY eases to 139.71, down 0.07% intraday, during the pre-Tokyo open trading on Thursday. The pair jumped the heaviest the previous day before stepping back from 140.32. Amid upbeat Brexit signals, traders await the official confirmation to keep the recent optimism. Also challenging the sentiment could be nearness to Bank of Japan (BOJ) Governor Haruhiko Kuroda’s speech and US President Donald Trump’s ‘friendly health advice’ to Iran.

Although The Times said that the European Union (EU) and the UK are on the brink of signing, there are no comments from either Brussels or London that makes the scene dicey. However, Sky News recently came out with the update suggesting the UK Cabinet has been given a heads up for a call with PM Johnson in the coming hours.

Before a few hours, Joe Barnes from Daily Express tweeted, “Senior European source tells me Boris Johnson is willing to accept that the EU hands back just 25 percent of the value of fish it catches in British waters, over a 5.5-year transition period. The UK was previously insisting on 35 percent, over three years.”

In addition to cautious optimism for Brexit, market players also get entertain by US President Donald Trump’s comments. The outgoing leader of the world’s largest economy recently warned Iran over its attack in Baghdad before turning down the Congress proposals over defense bill and stimulus. Although Mr. Trump’s action on the defense bill can keep Russia, Iran and China on the toes, policymakers at home are ready to boost the aid package to have a merry Christmas.

It should also be noted that the coronavirus (COVID-19) and its variant keep the fears of national lockdown on the table while vaccine hopes battle the bears.

Amid these plays, Wall Street benchmarks end Wednesday on a mixed tone while the US 10-year Treasury yields rose towards 0.95%.

Looking forward, the year-end holiday mood can restrict the market moves but Brexit announcements will be the key. Also, any surprises from BOJ’s Kuroda can propel the pair.

Technical analysis

A three-week-old falling trend line, around 140.35, becomes a tough nut to crack for the GBP/JPY bulls. However, pair sellers are likely to remain cautious unless witnessing a daily closing below 200-day EMA near 137.35.