GBP/JPY stays below 21-day EMA amid UK’s political drama

With the rage over the UK PM Johnson’s ability to convince the Queen to prorogue the Parliaments, the GBP/JPY pair remains under pressure while taking rounds to 129.52 amid Thursday’s Asian session.

Although the absence of fresh negatives from the US-China trade front and a lack of data on the economic calendar helped recover market sentiment on Wednesday, the UK lawmakers’ criticism to stop the Parliaments from working dragged prices downwards.

The UK Prime Minister (PM) Boris Johnson’s request to stop the British Parliaments from working got the Queen’s approval with the timeline being “no earlier than Monday 9th September and no later than Thursday 12th September 2019 to Monday 14th October 2019.” It should also be noted that Irish Times reported that British Minister for Foreign Affairs Simon Coveney received an “absolutely 100 per cent” guarantee of French support for Ireland’s position regarding the necessity of the backstop in talks with prime minister Edouard Philippe on Wednesday. On the contrary, The Telegraph ran a story quoting Ireland’s deputy prime minister while mentioning that the backstop won't be withdrawn on the back of the UK's promises.

Given the moves increasing odds of a no-deal Brexit, majority of the British lawmakers stood against such an action and are ready to challenge it in the court. Additionally, some of the Londoners are also on the streets to protest against the political play.

While trade/political headlines will undoubtedly drive GBP/JPY moves, Japan’s foreign investment data for the week ended on August 23 will also be the key as it will reflect the Asian nation’s risk outlook.

Technical Analysis

Unless breaking 130.00 round-figure, close to the 21-day exponential moving average (EMA), chances of pair’s pullback to 128.21/26, including multiple lows marked since early-month, can’t be denied.