- Brexit and also Hong Kong back in the headlines following further protests.
- Bears have eyes on 200-day moving average and the 38.2% Fibo.
GBP/JPY is trading relatively flat following the Tokyo open, Japanese GDP in line and Brexit related headlines. The cross is down 0.03% having traded between a range of 131.41 and 131.04. The performance of GBP closely mirrors the odds associated with the risk of a no-deal Brexit at the end of the month.
Japanese Gross Domestic Product arrived in line with expectations at 0.3% (expected (exp) 0.3%; previous (prev) 0.4%). This was quickly brushed aside and the focus remains on Brexit. We have yet further turmoil with Cabinet member Amber Rudd resigning over the prospect of a looming Hard Brexit.
"Indeed, Rudd is just one of many threads unravelling. We also have talk of the Tories running a candidate against the current House Speaker John “Ordaaaa” Bercow, which is totally against precedent – though Bercow’s actions in favour of thwarting Brexit are widely accepted to be totally against parliamentary precedent too. Moreover, we have suggestions that while the ‘rebel alliance’ legislation forcing PM BoJo to “seek” and “agree” an extension to Article 50 will become law today (after having been rushed through the Lords in, yes, an unprecedented fashion), the government is prepared to question the legality of the law itself,"
analysts at Rabobank explained.
Hong Kong back in the mix
GBP/JPY is indeed one of the most volatile pairs and there are plenty of risks on a geopolitical front, including Hong Kong which is back in the headlines following protests which were aimed at sucking Trump into the fray. Last month Trump suggested China should "humanely" settle the problem in Hong Kong before a trade deal is reached with Washington - The Yen is favoured as a safe haven in times of uncertainty.
GBP/JPY levels
GBP/JPY is drifting from the highs in the 132 handle with a focus on the 23.6% Fibonacci retracement level at 130.85. The key target for the bears comes in at 130.06 where the 200-day moving average and the 38.2% Fibo meet.
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