- GBP / JPY fades and bounces off its intraday low, triggering a two-day rally.
- Javid from UK confirms that you don’t need to be fully vaccinated to isolate, virus issues continue.
- Lead MEP hints at final Brexit ultimatum as UK pushes for renegotiation.
- Market sentiment declines in a light timeframe, risk catalysts, UK data dump key.
GBP / JPY remains under pressure around an intraday low of 153.02, down 0.03% so far in Thursday’s Asian session. In doing so, the quote portrays gloomy market conditions while also signaling traders’ indecision ahead of key second quarter UK GDP data.
Recent hints of US policymakers visiting their Chinese counterparts, initially for Treasury Secretary Janet Yellen before US Assistant Secretary of State Sherman, do not favor market bulls as covid woes remain dominant. The confirmation from UK Health Minister Sajid Javid that fully vaccinated Britons over 18 do not need to self-isolate is also positive for sentiment.
However, Britain’s five-month high death toll and Japan’s continued struggle with the virus, amid multi-day high infections, defy GBP / JPY optimists. The risk of the European Union (EU) final ultimatum to the UK over pressure to renegotiate the border with Northern Ireland (NI), as The UK Express hinted at, also put the pair to the test.
It should be noted that the Japanese Producer Price Index (PPI) for July recently jumped to 1.1% mth and 5.5% yoy from 0.5% and 5.0% of respective expectations.
Amid those games, S&P 500 futures remain lackluster as 10-year US Treasury yields and the Japanese Nikkei 225 show slight gains at time of release.
Given the gloom of the day ahead of UK data, GBP / JPY traders will be keeping an eye on monthly GDP, manufacturing and industrial output figures in addition to preliminary second quarter (Q2) GDP readings. .
“The market is forecasting a 4.8% gain in second quarter GDP, with a strong outlook ahead given the significant easing of restrictions in July. Ahead of the June update, the trade balance began to stabilize after a period of Covid / Brexit volatility, ”Westpac said ahead of the data.
If the forecast numbers match the bullish forecast, the BOE’s downside calls come to life and could help GBP / JPY buyers clear the immediate hurdle north.
Although a 17 day old support line near 153.00 stops the GBP / JPY before heading towards the 100-DMA level around 152.75, 50-DMA near 153.10 and a hurdle One-month horizontal near 153.50 restricts the GBP / short term. JPY on the rise.