GBP/JPY erases earlier gains, probes multi-week lows under 153.00
|- GBP/JPY is probing multi-week lows under 153.00 ahead of UK GDP data out on Thursday.
- If the pair does break to the downside, technicians may target a move towards the 200DMA at 152.00.
It’s been a choppy and ultimately indecisive day for GBP/JPY, with the pair ultimately respecting recent ranges FX markets focussed more on macro themes (such as US inflation) rather than UK/Japan domestic issues. The pair managed to hit its highest level since last Thursday in the 153.70s at the start of the US trading session, but has since reversed these gains to trade ever so slightly in the red on the day back to the south of the 153.00 handle.
Indeed, given that it is back below 153.00, the pair is hovering just above the multi-week lows set at the start of this week at around 152.70. For now, support in the form of the 14 and 28 September highs in the 152.50-80 region is holding up. The preliminary estimate of Q3 UK GDP is released at 0700GMT on Thursday and could provide the momentum to either break below support (in the case of poor GDP numbers) or move back to test weekly highs (in the case of good numbers).
Brexit newsflow is also going to be worth monitoring over the coming days and weeks with the UK on the cusp of escalating tensions with the EU and even putting the post-Brexit trade deal at risk if it opts to trigger Article 16 of the Northern Ireland Protocol (which allows either side to unilaterally suspend parts of the agreement if it is causing significant societal damage).
In the case of a downside break, the next key area of support is the 200-day moving average which sits almost band on the 152.00 level. In the case of an upside breakout, the next key area of resistance is the 2 November low at just above 154.50.
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