- GBP/JPY stays modestly changed amid mixed catalysts.
- Optimism surrounding the Tory leadership seems to wane off-late, US-China trade stories favor riskier assets.
- UK’s political, trade headlines from the US/China will keep the markets entertain amid a lack of major data/events from Japan and Britain.
GBP/JPY seesaws around 140.30 amid early Wednesday. Traders are struggling to cheer the broad risk-on sentiment as challenges to the United Kingdom’s (UK) ruling Conservative Party increase.
While a receding lead of the Tories in the polls to December election could be considered as a major factor showing political pessimism in Britain, criticism to the Conservative manifesto and Tory leaders keep exerting the pressure on the GBP/JPY pair. The latest polls by YouGov for The Times and Sky News showed on Tuesday that Support for British Prime Minister Boris Johnson's Conservative Party has only 11 point lead over the main opposition Labour Party. Further, comments by the Duchy of Lancaster Michael Gove, over downplaying the rap singer and also on the mistakes concerning the European Union’s (EU) single market for services, recovered wide criticism. Additionally, a former ambassador to the EU Ivan Rogers raised doubts that the services industry of the UK is likely to sacrifice in a trade deal with the region.
On the other hand, news concerning the phase-one trade deal between the United States (US) and China keeps coming positive. Also, analysts at Goldman Sachs anticipate a tariff rollback from the US, in Bloomberg report, whereas JP Morgan’s call for a global economic rebound in 2020 and Reuters’ poll indicating Japanese share prices rising to 30-year high also contributed to the risk tone.
Markets seem to have ignored the Bank of Japan (BOJ) policymaker Makoto Sakurai who said that BOJ will patiently continue with powerful monetary easing. It's worth mentioning that the US 10-year treasury yields and S&P 500 Futures stay in the positive territory by the press time.
Given the absence of major data from Japan and the UK, market players are likely to keep eyes on trade/political headlines for fresh impulse.
Technical Analysis
Tuesday’s spinning top on the daily chart shows traders’ indecision. As a result, the monthly range between 141.58 and 139.32 can keep entertaining investors.
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