- GBP/JPY stops further declines after three consecutive days of downpour.
- Mixed headlines concerning the US-China trade deal, Moody’s outlook for the UK in spotlight recently.
- Japan Machinery Orders, UK GDP decorate the economic calendar while trade/Brexit headlines keep the driver’s seat.
Following its declines to the lowest daily closing since October 25, not to forget three days of consecutive downpour, GBP/JPY sellers wait for clear direction while taking rounds to 139.70 during early Monday’s Asian trading session.
Even if the United Kingdom’s (UK) ruling Conservatives are in the lead for December month polls, Moody’s recently downgraded the British economy’s economic outlook from ‘stable’ to ‘negative’ on policy paralysis.
Adding to the pair’s weakness could market rush towards risk-safety amid mixed signals concerning the trade relations between the United States (US) and China. The US-side step back from tariff reversal seems to have a negative impact on market’s risk sentiment despite progress in poultry import talks.
Additionally, expectations of another hung parliament in Spain and political pessimism surrounding Bolivia also check the market’s risk-taking capacity.
The US 10-year treasury yields rushed to the highest since July on Friday, 1.95%, but is less likely to hold the strength considering S&P 500 Future’s recent weakness.
Japan’s September month Machinery Orders are likely to reverse previous contractions of 2.4% MoM and 14.5% YoY to a rise of 0.9% and 7.9% respectively. Further, the preliminary reading of the UK’s third-quarter (Q3) Gross Domestic Product (GDP) could also please the British pound (GBP) buyers if matching +0.3% QoQ forecast versus -0.2% prior.
October 24 low near 138.90 and June month high around 138.30 could keep further downside restricted while buyers need to clear 21-day Simple Moving Average (SMA) level of 140.00 to confront three-week-old falling trend line close to 140.56.
- R3 140.9
- R2 140.56
- R1 140.08
- PP 139.75
- S1 139.28
- S2 138.94
- S3 138.46
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