GBP/JPY drops further towards 135.00 on hopes of BOE rate cut
|- GBP/JPY refreshes three-day low amid increasing odds of BOE’s negative rates.
- UK Chancellor Sunak is also up for helping the economic cope with the second lockdown.
- US elections, FOMC adds importance to “Super Thursday”.
GBP/JPY stays heavy around 135.30, following the recent drop to 135.13, amid Thursday’s Asian trading. Although the US elections gain major market attention, fresh chatters concerning the Bank of England’s (BOE) rate cut to the controversial negative zone weigh on the pair off-late.
Telegraph’s latest update on the BOE, relying on the anonymous sources, suggests that the “Old Lady” is up for taking the benchmark interest rate from 0.10% current to the negative region. On the other hand, Reuters’ poll indicates an additional 100 billion pounds ($129.72 billion) of the asset purchase program, taking the total to 845 billion pounds.
It should also be noted that British Chancellor Rishi Sunak is also ready to offer relief to the workers of the factories that are closed due to the second national lockdown. Telegraph mentioned likely 80% of wage payment to furloughed workers as the key announcement.
Elsewhere, Democratic Candidate Joe Biden recently won in Michigan, taking the total electoral vote counts to near to the 270 required for presidency. However, US President Donald Trump is challenging the counting process in Wisconsin and has already stopped the results from the key state like Pennsylvania until Friday.
While the uncertainty concerning the US election weighs on the treasury yields and the US dollar, equities gain from the increasing odds of further stimulus.
Looking forward, global traders will keep eyes on the Bank of England’s (BOE) multiple announcements scheduled for release at 07:00 GMT. Also important will the Tory government’s help for the British economy to battle the second nation lockdown as well as the monetary policy meeting of the US Federal Reserve. It should, however, be noted that the US election updates can keep the driver’s seat in any case.
Read: Bank of England Preview: Lockdown raises chances of negative rates, streling could suffer
Technical analysis
Unless providing a daily closing below the 50-day SMA level of 136.77, GBP/JPY bears can look to an upward sloping trend line from May 18, at 134.30 now.
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