GBP/JPY: UK’s Yellowhammer report, risk resettle pulls the quote back from 6-week high
|- GBP/JPY struggles to extend recent recovery amid Brexit pessimism.
- Traders rethink on their risk profiles ahead of the key events while also respecting trade-positive news.
- Japanese PPI, Machinery Orders in the spotlight for now.
With the UK’s Yellowhammer renewing fears of negative outcomes post no-deal Brexit, coupled with market’s risk-off before the key day, GBP/JPY steps back from six-week high while trading near 133.00 during the early Asian session on Thursday.
The United Kingdom (UK) Government released the much-debated Yellowhammer report, already leaked during early August, that contains a list of the worst-case scenario of the no-deal Brexit outcome. The Guardian shared the full list that also contains a warning about protests in the nation and fear for the low-income groups. While challenges cited in the report gained little attention, British lawmakers debated much about the one point (out of 20) that was redacted.
At the data front, the UK RICS Housing Price Balance for August recovered from -11% forecast to -4%.
On the other hand, the Japanese Yen (JPY) seems to recover some of its latest losses as investors brace for the key European Central Bank (ECB) meeting and the United States (US) Consumer Price Index (CPI). Investors’ wait for August month Producer Price Index (PPI) and July month Machinery Orders from Japan could also be considered as a reason for the shift in the market’s risk tone.
Though, optimism surrounding the US-China trade relations, backed by China’s latest efforts, keep calming the risk-off.
Moving on, the outcome of the second-tier Japanese data will become immediate catalysts while trade/political news could entertain markets ahead of the key events/data. The Japanese PPI is likely declining to -0.2% and -0.8% on an MoM and YoY basis respectively against 0.0% and -0.6% priors. Further , Machinery Orders could also slump to -9.9% and -4.5% versus +13.9% and +12.5% previous readouts.
Technical Analysis
Even if the quote flashes new high since late-July, it needs to cross the July 18 low of 133.85 in order to justify its near-term strength, failing to which can recall 132.00 and August 22 high near 130.70.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.