Weak GBP, Strong JPY

The JPY will find buyers if the second wave of COVID-19 keeps growing in pace. Global cases now top 17 million after five of the last seven days saw one-day jumps of greater than 250,000 infections.

For the GBP there has still been very little progress made in Brexit talks as both the EU and the UK steel their positions ahead of final negotiations in the Autumn. The official deadline for a deal to be arranged is by year-end, but the end of October is the functional deadline to allow enough time for any deal to be implemented. This means that negotiations should start again in September. With expectations poor about a resolution rallies higher in the GBP should find sellers.

With time running out to arrange a deal the GBPJPY should find sellers if it manages to make its way up to 138.00 and the descending weekly trend line.

We expect this trade to play out between now and the next 4-6 weeks.

 

Trade Risks:

  • If we see a slowdown in infection rates across the world and a second wave is averted this will invalidate this outlook.

  • If we get positive Brexit news this will invalidate this outlook.

 


 

Learn more about HYCM

 

High Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD jumps back above 1.1950 amid upbeat market mood

The bid tone around the euro strengthened on Tuesday, pushing EUR/USD higher above 1.1950, as stock markets gained, weakening safe-havens such as the greenback. Coronavirus vaccine optimism and buoyant equity markets weigh over the dollar. Fed's Powell says the US economy remains in a damaged state.

EUR/USD News

GBP/USD eyes 1.3400 as bulls cheer US dollar weakness, focus on PMIs, Brexit

GBP/USD welcomes December with mild gains, trading above 1.3350. Concerns about US economic strength, stimulus weigh on the greenback. Brexit chatters reach the end-game with no clarity over the key hurdles. US Manufacturing PMIs and Fed Chair Powell’s testimony awaited.

GBP/USD News

Gold braces for a bumpy road to recovery above $1775

Gold (XAU/USD) is making another recovery attempt from five-month lows of $1765 as the US dollar dips on improved market mood amid coronavirus vaccine and US stimulus hopes.

Gold news

US ISM Manufacturing PMI Preview: With a tablespoon of salt

Business shutdowns and personal restrictions are expected to slow the US recovery as viral counts in many parts of the country force governments to roll-back previously opened sectors.

Read more

Black Friday 2020 Discounts!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

More info

Forex Majors

Cryptocurrencies

Signatures