GBP/JPY bounces off one-week low as traders struggle for direction amid Japan off

GBP/JPY recovers to 142.75 amid the initial Asian session on Friday. The pair began 2020 on the back foot amid a lack of Brexit clarity and softer-than-expected UK Manufacturing PMI. However, Japan’s off seems to trigger the quote’s pullback off-late.

The Guardian came out with the survey results from the BOE that said "Growing numbers of business leaders in the UK believe Brexit uncertainty will take longer to resolve than the PM Boris Johnson pledged before the election." On the other hand, Credit Agricole says, "We still expect to get more tangible evidence of the positive impact on business confidence from the abating political risks later in the UK this month with the risk of a no-trade deal Brexit still looming large on the horizon.”

Japanese markets are off for the week amid the New Year celebrations and hence most parts of the Asian session are likely to remain inactive. Also weighing on the sentiment is the year-start holiday mood and a lack of major catalysts elsewhere.

Even so, doubts over the phase-two talks of the US-China trade relations and the UK PM Johnson’s Adviser Dominic Cummings’ call for changes in civil services added to the safe-haven strength. Also supporting the rush to risk-safety was the US-Middle East tension.

As a result, the US 10-year treasury yields drop nearly 35 basis points to 1.87% the previous day while taking rounds to mostly the same levels by the press time.

Looking forward, the UK’s second-tier data like Construction PMI, Nationwide House Prices and Mortgage Approvals, could entertain short-term traders. However, the major moves are likely to look for trade/Brexit/political headlines.

Technical Analysis

50-day SMA level around 141.60 offers immediate support ahead of 140.00 and the 200-day SMA level of 138.00. In order to please buyers, prices need to stay strong beyond the 145.00 mark.