GBP/JPY buyers approach 159.00 on cautious optimism, mixed concerns over Brexit
- GBP/JPY grinds higher after bouncing off two-month low.
- UK PM Johnson reiterates plan to alter NIP amid hopes of EU’s easing stance.
- Likely improvement in British Manufacturing, cautious optimism elsewhere also favor bulls.
- Brexit headlines, UK employment report becomes important for near-term directions, risk catalysts are crucial too.
GBP/JPY picks up bids to renew intraday high around 158.75, extending the previous day’s recovery moves, as Tokyo opens for Monday’s trading. The cross-currency pair’s latest rebound could be linked to the firmer sentiment and mostly positive headlines concerning Brexit.
UK PM Boris Johnson braces for altering the Northern Ireland Protocol (NIP) with hopes of a change in the European Union’s (EU) position. The UK government is expected to reveal plans for unilateral changes in NIP on Tuesday. The bloc, however, previously warned of such actions with a cut in a trade deal with Britain.
On the other hand, the Financial Times (FT) conveyed optimism at the British manufacturers as they jostle to ease the supply chain concerns. “Three-quarters of companies have increased the number of their British suppliers in the past two years, according to a survey by Make UK, the manufacturers’ trade group,” said the news.
Elsewhere, hopes of easing virus spread in China join the Fed Chairman Jerome Powell’s static view of a 50 bps rate hike in the next two meetings, coupled with the downbeat US sentiment data, to underpin the market’s cautious optimism of late.
It’s worth noting, however, that the ongoing virus-led activity restrictions in China join worsening geopolitical conditions in Donbas to probe the GBP/JPY buyers.
While portraying the mood, the S&P 500 Futures print mild gains after the Wall Street benchmarks rallied the previous day. Further, the US 10-year Treasury yields also extend Friday’s recovery moves, up 1.5 basis points (bps) around 2.95% by the press time.
Looking forward, GBP/JPY traders may take clues from the risk catalysts amid a light calendar at home. However, Tuesday’s UK employment figures and Brexit updates will be crucial for clear directions.
Technical analysis
A one-month-old descending trend channel formation restricts short-term GBP/JPY moves between 160.60 and 154.85.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
