GBP/JPY struggles around 3-day low, in search of a fresh direction
|- No-deal Brexit fears weigh on GBP/JPY amid overall turbulent market conditions.
- Japanese Retail Trade, the UK second-tier data and new headlines will entertain traders.
Despite taking a U-turn from the 21-day simple moving average (SMA), the GBP/JPY pair trades modestly unchanged to 134.51 during early Monday.
With Boris Johnson’s election as the UK Prime Minister (PM), odds favoring a no-deal Brexit have increased off-late, which in turn weigh on the currency pair.
On the other hand, safe-havens like the Japanese Yen (JPY) and Gold have been recently gained dominance amid increasing expectations of a dovish monetary policy wave from major central banks.
Challenging the momentum was the US data and this week’s trade negotiations between the US and China. Also, likely sales tax hike from Japan and further easy money policy by the Bank of Japan (BoJ) offer additional support to countertrend traders.
Given the Brexit pessimism's downside pressure on the pair confronting volatile risk sentiment, investors await fresh clues for further directions amid usually silent Asian start of the week.
June month Retail Trade from Japan follows the same month prints of Consumer Credit, Mortgage Approvals and Money Supply data from the UK to decorate today’s economic calendar. Further, updates concerning the two-day trade talks in Beijing, which will start from Tuesday, could also entertain momentum traders.
Technical Analysis
While a downside break of last-week low surrounding 134.24 can fetch the quote to 134.00 and then to the current month bottom around 133.85, bears might not refrain from challenging January low close to 131.80 during further declines. Alternatively, an upside clearance of 21-day SMA level of 135.15 can trigger the pair’s recovery to recent high close to 135.70 ahead of targeting 136.30 and present month top of 137.80.
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