GBP/JPY holds tightly to multi-week top amid Brexit doldrums

  • GBP/JPY buyers catch a breath near August-start top as the UK keeps trying for a no-deal Brexit ahead of the Parliament close.
  • UK PM Johnson gathers support for an early election, denies asking for Brexit delay to the EU.
  • North Korea again test-fires unidentified projectiles, the US eyeing sanctions over Turkey and the US-China trade optimism prevails.

With the UK PM’s refrain from giving away on the no-deal Brexit, coupled with fresh geopolitical tensions, GBP/JPY clings to 132.40 during the early Asian session on Tuesday.

The pair has been witnessing an upside pressure amid the receding odds of a no-deal Brexit as the United Kingdom (UK) policymakers managed to have the law that pushes the Prime Minister (PM) Boris Johnson towards asking the European Union (EU) for three month extension to the October 31 deadline if the deal isn’t reached by mid-October. Adding to the optimism is the Members of Parliament’s (MPs) ability to turn down the motion calling for an early election before Brexit.

However, PM Johnson refrains from stepping back as he again put the motion to call for early election in the House of Commons, which so far has got another failure for him by the MPs, while also conveying lack of readiness to ask for Brexit extension to the EU. Further. The PM stays on the top to shut the parliament for five weeks till mid-October.

Elsewhere, North Korea test-fires two unidentified projectiles after few hours of offering the US to talk on the nuclear pact. Though, markets showed less attention to it considering the repeated attempt from the rogue nation. Moving on, the US is considering to levy fresh sanction on Turkey for its purchase of Russia aircraft while the US-Iran tension is also grabbing the market’s attention.

On the other hand, investors hold their risk-on preference intact as the US-China trade talks are likely to take place in October and there haven’t been any negatives to it so far.

Moving on, the UK Parliament news and British employment numbers will be the key to watch for fresh impulse while trade/political headlines could keep entertaining momentum traders.

Technical Analysis

Unless crossing mid-July low near 133.85, 100-day exponential moving average (EMA) near 134.80 is less likely to gain buyers’ attention. On the contrary, a dip below 50-day EMA level of 131.85 could recall August 22 high near 130.70 prior to highlighting 130.00 for sellers.

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