GBP/JPY: Mildly bid around 136.00 amid UK politics, risk-on sentiment

Expectations surrounding easy monetary policy dominated over the US-China trade risk catalysts.
Equities, bond yields manage to lure buyers while safe-havens weakened.
Japan’s industrial production and the UK political plays will be followed for fresh impulse.

Anil Panchal FXStreet

Although improving risk sentiment pulled the GBP/JPY pair off from 1-week low, political uncertainty at the UK exert downside pressure on the quote that trades below 136.00 amid Friday morning in Asia.

Be it the Bank of England (BOE) Governor or the US Federal Reserve policymakers, signals of easy monetary policy were well received by the global investors. Flight to equities remains intact and the US 10-year treasury yield, the global risk barometer, surges to 1-month high as it takes the rounds 2.132%.

Anti-Semitism accusations on some of the top members of the opposition Labour party, coupled with criticism on Boris Johnson’s failure to support the now ex-UK ambassador to the US, grabbed market attention. Adding to the pessimism was the European Commission Chief nominee who closed the door for renegotiating the Brexit deal.

It should also be noted that the US President Donald Trump’s tweets raising additional blocks to expectation of the trade deal with China couldn’t derail the investor sentiment.

While May month Industrial Production details from Japan acts as an immediate catalyst to watch, global risk events and UK political plays can keep playing background music for the traders. Speech from the BOE’s Gertjan Vlieghe will also have its impact on prices.

The Industrial Production reading may is expected to remain unchanged at -1.8% (YoY) and +2.3% (MoM) but the Capacity Utilization may slump to +0.2% from +1.6% earlier.

Technical Analysis

Late-September 2016 high around 132.50 and the year 2019 low at 131.79 can keep flashing on bears’ radar unless prices rally beyond monthly top near 137.80, which in turn can please buyers with 138.33 and 140.00 round-figure.

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.

GBP/USD flies to two-week highs, targets 1.3400

GBP/USD trades well above the 1.3300 barrier on Thursday as the Greenback comes under renewed selling pressure following a softer-than-expected US NFP report in June. Meanwhile, Cable extends its multi-day recovery and looks to challenge 1.3400 sooner rather than later.

EUR/USD: Signs of life emerge above 1.1400

EUR/USD leaves behind two daily pullbacks in a row and advances to multi-day peaks near 1.1470 on Thursday, partially offsetting the sharp decline in place since June. The pair’s decline follows the intense retracement in the US Dollar, which is particularly sponsored by disheartening prints from June’s Payrolls and the sharp sell-off in USD/JPY. The US markets will be closed on Friday due to the Independence Day holiday.

Gold hits six-day tops past $4,100

Gold extends its bullish momentum on Thursday, climbing above the $4,100 mark per troy ounce to reach its highest level in a week. The precious metal’s sharp rebound comes as the US Dollar retreats following disappointing US NFP data.

Strategy's STRC volatility points to late Bitcoin cycle reset — Bitwise

The recent volatility surrounding Strategy's perpetual preferred stock, STRC, could signal that Bitcoin (BTC) is approaching a cycle bottom, according to Bitwise CIO Matt Hougan. In a Wednesday report, Hougan argued that the sharp decline in STRC and Strategy's MSTR stock should be viewed as "classic end-of-cycle dynamics" rather than evidence of a broader structural threat to Bitcoin.

The market may no longer be giving the Magnificent Seven a free pass

For much of the past three years, investing has felt surprisingly simple. Whenever markets stumbled, investors knew where to look. Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla repeatedly led Wall Street higher, shrugging off inflation fears, higher interest rates and geopolitical shocks.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.