GBP/JPY seesaws near multi-month low amid trade tension, few catalysts from UK
|- The US-China trade tension keeps the GBP/JPY down amid lack of major drivers from the rest of the globe.
- UK politics remain almost silent amid no major data/events but challenges to the PM Johnson prevail.
Although fears of the global recession keep exerting downside pressure on the GBP/JPY pair, absence of major catalyst from the UK and Bank of Japan’s (BOJ) favor for easy money guard the declines as the quote seesaws near 128.80 during Thursday morning in Asia.
While China’s Yuan depreciation has recently added fuel into already boiling concerns for a trade war between the world’s largest economies, the Trump administration’s order barring the government departments from purchasing products of the Chinese companies including Huawei becomes the latest salvo in the hot issue.
Considering the brighter of a full-fledged trade war to drag the global economy into recession, central banks from New Zealand and India announced big rate cuts to safeguard their domestic systems from perils of such a threat on Wednesday.
As a result, the Japanese Yen (JPY) continues to hold its market favorite status, mainly due to its safe-haven allure. However, BOJ’s favor of ultra-loose monetary policy and the latest soft data concerning Japanese Trade Balance and Current Account limit the quote’s south-run.
On the other hand, UK Prime Minister (PM) Boris Johnson is likely to witness a no-confidence vote as soon as the Parliament resumes in early September after the summer recess. Some among the Tory rebels are also plotting to push the Queen to sack PM Johnson if he refrains from respecting the vote.
Amid lack of data from Britain and Japan, investors will keep an eye over trade/political issues to determine near-term market direction.
Technical Analysis
The present month low near 128.10, followed by 128.00 round-figure, becomes the key support to watch while buyers will wait for a sustained break beyond 130.10, including current week high, for a fresh upside towards July 30 low of 131.61.
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