- UK political uncertainty held the GBP traders from placing any aggressive bets.
- Softer UK CPI figures for Oct. also did little to provide any meaningful impetus.
- Reviving safe-haven demand benefitted the JPY and might exert some pressure.
The GBP/JPY cross remained confined in a narrow trading band, around the key 140.00 psychological mark and had a rather muted reaction to the latest UK consumer inflation figures.
Data released this Wednesday showed that the headline UK CPI fell 0.2% MoM and eased to 1.5% yearly rate in October, both missing estimates. The softer figures, however, did little to move the British pound or assist the pair to break out of a familiar trading range held over the past four weeks or so.
Traders remained on the sidelines
Given the uncertainty surrounding the outcome of the UK snap election in December, though is biased towards a majority for the UK Prime Minister Boris Johnson's Conservative party, investors seemed reluctant to place any aggressive bets and led to the recent subdued price action.
Meanwhile, a softer risk tone through the European session on Tuesday, amid persistent US-China trade uncertainty, was seen benefitting the Japanese Yen's perceived safe-haven status and might turn out to be the only factor that might exert some downward pressure on the cross.
It is worth reporting that the recent optimism over the possibility of a US-China trade deal faded after the US President Donald Trump indicated that he would only sign if it was the “right deal” for America and further added that the US will increase tariffs on China if the partial deal is not reached.
As investors await fresh updates on the US-China trade talks, it will be interesting to see if the cross continues with its subdued/range-bound trading action or gains the required momentum to finally break through the recent trading range.
Technical levels to watch
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