GBP/JPY stays on the front foot around 140.50, BOJ in the spotlight

With the increasing odds of a soft Brexit helping the GBP/JPY pair to confront overall downbeat risk sentiment, prices stay positive around 140.50 during Thursday morning in Asia.

While global rating giant Moody’s doubts over the United Kingdom’s (UK) political stability and future relation with the European Union (EU), the news that the Nigel Farage’s Brexit party is pulling out of many seats seems to retail confidence among the British Pound (GBP) buyers off-late. Additionally, news that the UK’s House of Lords has cleared the first hurdle for the UK Prime Minister (PM) Boris Johnson’s snap election motion also pleased the pair bulls.

On the contrary, mixed news concerning the US-China trade deal, considering the absence of the November summit in Chile and comments from the United States’ (US) Treasury Secretary, have recently been weighing on the risk-tone. It should also be noted that the United States’ (US) plans to renew Russian, Chinese and European countries’ sanction waivers concerning Iran could join the optimists’ side.

Investors now await monetary policy meeting decision from the Bank of Japan (BOJ) for fresh direction. The BOJ is expected to hold present monetary policy unchanged bit NIKKEI suggests that the Japanese central bank will shed more light on future moves while saying, “While the BOJ is likely to forego additional mitigation at this meeting, it will reiterate its positive attitude toward mitigation by amending the guidelines.”

Technical Analysis

Not only a sustained rise beyond 140.50 but a successful break above the monthly top of 141.50, backed by a clear run-up past 141.75 comprising late-May high, also become necessary for buyers to justify their strength. Absence of which could recall last week’s low near 138.87 and June month high of 138.33.