GBP/JPY: Trump cancelling summit with Kim keeps Guppy capped around 146.00

• The Japanese Yen and the Swiss Franc see strong demand on geopolitical tensions as Trump gets ready to impose 25% tariffs on imported vehicles and canceled the summit with North Korean leader Kim Jong Un.
• The better-than-expected UK retail sales give Sterling a 100-pip boost in Europe but bears are already retracing the move.

GBP/JPY continues its 5th day of the slide. In Asia, the Guppy was capped at the 147.20 resistance and lost about a 100 pips to reach the 146.10 support. Earlier in Europe, bulls lifted the pair back up to the 147.20 resistance but bears tamed the bulls expectations down as the pair is retreating to the downside from the intraday ceiling. The GBP/JPY currency cross is trading at around 146.30 down 0.45% on Thursday.

Safe-haven JPY and CHF are among the strongest G10 currencies in the last 24 hours. Indeed, the lack of progress between the US and China has seen investors rushing to safe haven currencies. Additionally, the new proposition of the US President Donald Trump to impose a 25% tariffs to imported vehicles to the US has reinforced the Yen safe-haven demand.

Moreover, US President Trump said moments ago that it is “inappropriate at this point to have a summit (with North Korea)” and that he canceled it based 'on the tremendous anger and open hostility.' The summit of the US and the North Korean leaders was originally scheduled for June 12.

Earlier in Europe, the UK retail sales in April came out much better than expected giving the Guppy a 100 pip boost to the 147.20 resistance. However, traders were quick to take their profits as the positive piece of data follows a long string of worse-than-expected numbers. Investors will need further evidence of growth and inflation in the United Kingdom before the British pound can regain some positive sentiment. It is worth noting that the Bank of England recently said that it was data -dependent.

Looking further, the Tokyo Consumer Price Index (CPI) dataset is due at 23:30 GMT. Inflation in Japan is not expected to rise strongly, however, a better-than-anticipated data can further boost the Japanese Yen. 

GBP/JPY 4-hour chart

The pair is trading below its 50, 100 and 200-period simple moving averages (SMA) on the 4-hour chart suggesting a strong downward bias. Supports are seen at the 146.00 handle followed by the 145.00 swing low. To the upside, the 147.00 swing low and 149.00 supply level should provide resistance.