GBP/JPY refreshes one-month high above 134.50, Brexit, US riots in focus
|- GBP/JPY rises for the fourth day in a row to challenge the early-May top.
- Hopes of further aids from the Tory government, Brexit-positive news keep the bulls hopeful.
- US President Donald Trump shows readiness to use all measures to tame the latest riots.
- Brexit talks begin today, updates from the US will also be important to watch.
GBP/JPY takes the bids near 134.65, up 0.17% on a day, during the initial hour of Tokyo open on Tuesday. Although trade sentiment seems to dwindle amid the US civil unrest, Brexit-positive news, coupled with the hopes of further stimulus from the UK government, seem to favor the quote off-late.
Riots to oppose the alleged killing of George Floyd by the US police get worse in the US. The looting in various states, as well as protestors’ gathering near the White House, pushed US President Donald Trump to show a hard dissent against any further moves and readiness to use militaries to tame the outrage.
Following the news, US 10-year Treasury yields drop one basis point to 0.65% while S&P 500 Futures show 0.36% drop to 3,043 by the press time. Even so, Japan’s Nikkei registers over 1.0% gains to 22,285 as we write.
On a positive side, The Telegraph came out with the news, relying on their sources to suggest that British Chancellor Rishi Sunak considers national insurance holidays for firms as part of the coronavirus recovery package, to be announced in July.
Further, the UK Times raised hopes of breaking the Brexit deadlock ahead of today’s key negotiations. The news suggests that the UK may compromise on fisheries and ‘level playing field’ trade rules if the European Union (EU) backs off from its ‘maximalist’ demands.
While the beginning of the fourth round of Brexit talks between the EU and the UK is key for the GBP/JPY pair traders, other risk events from the US, also concerning China, could offer directions as well.
Technical analysis
A two-month-old falling trend line near 135.00 seems to restrict the pair’s immediate upside. However, 50-day SMA, currently near 133.00, followed by a two-week-old support line, at 132.40, could question the sellers during the fresh downside.
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