GBP/JPY stays on the front foot amid UK’s political optimism
|- GBP/JPY benefits from Brexit party leaders’ favor to Conservatives.
- US-China trade tussle exerts downside pressure.
- UK employment numbers to decorate economic calendar.
Nigel Farage’s gift to the Tories seems to propel the GBP/JPY pair despite broadly dull sentiment. The quote takes the bids to 140.20 during early Tuesday morning in Asia.
The Brexit party leader’s statement that he will not contest against the ruling Conservatives while showing readiness to stand firm on 300 seats to challenge others propelled the British pound (GBP) the previous day. The reason mentioned by the hard Brexiteer was to facilitate the party’s say in the parliament.
The same will help the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson to anticipate a clear victory in December month’s election and also increases the hope of his Brexit deal to get through the parliament during January.
The quote largely ignored downbeat concerns for the trade deal between the United States (US) and China while also shrugged off geopolitical tensions in the Middle East and Hong Kong.
While the absence of the US bond traders limited market’s moves, Wall Street closed in negative on Monday.
Investors will now look forward to the UK’s September month Average Earnings and Unemployment Rate while also keeping an eye over October month’s Claimant Count Change for fresh direction. “ We look for the unemployment rate to hold steady at 3.9% in September (mkt 3.9%) after last month's unexpected nudge higher. For wage growth, we look for ex-bonus wages to edge up a touch to 3.9% y/y (mkt 3.8%), with underlying private sector regular pay growth holding steady at 4.0% y/y. While there are signs from other surveys that the UK labor market may start to deteriorate further, the evidence will likely be slow to build given the lags in the data, (this month's data is a 3m MA of July-Sept figures,)” says TD Securities.
On the geopolitical front, the US-China trade story and the Hong Kong protests could keep the traders entertained.
Technical Analysis
A daily close below October 24 low of 138.87 will recall June month high surrounding 138.30/25 whereas 140.80 holds the key to October month top near 141.50.
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