GBP/JPY: Sellers sneak in around 4-day top amid upbeat Japanese data, mixed risk sentiment

  • GBP/JPY fails to hold four-day high as Japan’s Machinery Orders unexpectedly surged in June.
  • Brexit, Hong Kong also question recent risk recovery.

With the upbeat Japanese data, GBP/JPY takes a U-turn from recent highs to 128.25 during early Wednesday.

Japan’s June month Machinery Orders largely beat -1.3% and -0.6% respective consensus for MoM and YoY readings by rising to 13.9% and 12.5%. The data triggered the Japanese Yen (JPY) strength that was previously being challenged by the US-China trade positive news.

Adding to the pair’s pullback could also be on-going protests in Hong Kong and rising uncertainties surrounding Brexit. While Hong Kong Airport authorities are now preparing to stop protestors from disturbing flight operations, the UK policymakers are in the media showing their will to challenge the Prime Minister Boris Johnson’s will to leave the EU on October 31, be it with or without a deal.

It should also be noted that investor sentiment might have been confined ahead of key activity data from China, which in turn would show how the world’s second-largest economy is performing amid a trade war with the US.

Portraying the market’s risk sentiment, the US 10-year treasury yields fail to extend the previous rise while flashing 1.68% mark.

Other than trade/political headlines, investors will now be on the lookout for July month Consumer Price Index (CPI) data from the UK that is expected to witness a bit softer reading versus priors.

Technical Analysis

While Monday’s high of 127.52 can offer immediate support, 126.54 becomes the key downside number to watch. On the contrary, 130.00 and 21-day exponential moving average (EMA) level of 130.90 can keep near-term advances confined.

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