GBP/JPY: Trade/political tensions weigh on Brexit optimism


  • GBP/JPY struggles amid contrasting fundamentals.
  • EU leaders’ upbeat comments raise odds of a Brexit deal by October 31 deadline.
  • US-China trade optimism fades, the Middle East contributes to geopolitical tension.

Brexit-positive comments from the EU’s Juncker seems to fall behind recent trade/political pessimism as the GBP/JPY pair remains modestly changed to 135.30 during the early Asian session on Friday.

The European Commission president, Jean Claude Juncker, recently offered a lifeline to the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson by showing readiness to turn down the Irish backstop if Britain has good alternatives. Mr. Juncker also showed optimism towards reaching a deal with the UK by the current Brexit deadline of October 31.

On the contrary, receding optimism concerning the US-China trade deal, as can be anticipated from the US officials’ recent comments, and renewed geopolitical tension in the Middle East weigh on the prices. The Saudi-led coalition recently launched military operation in Yemen.

In case of the economic calendar, Japan’s August month inflation numbers flashed mixed signals. The headline National Consumer Price Index (CPI) lagged behind 0.6% forecast to 0.3% on YoY while National CPI ex-Food and energy grew past-0.5% expectations to 0.6% on a yearly basis.

With only the Bank of England’s (BOE) quarterly bulletin on cards, investors will keep a tab on trade/political headline for fresh impulse.

Technical Analysis

A sustained break above late-July highs nearing 135.70 becomes necessary for the pair to aim for July 09 high of 136.30 and July month peak of 137.80, failing to do so highlights overbought conditions of 14-day relative strength index (RSI) that can fetch the quote to 100-day simple moving average (SMA) level of 134.85 prior to highlighting 133.90/85 support-zone, which comprises lows marked on July 18 and during the current week.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex News

Editors’ Picks

EUR/USD pressured around 1.13 after jump in US jobs

EUR/USD is trading around 1.13, down after US Non-Farm Payrolls shocked with a leap of 2.5 million jobs in May, contrary to all projections. The greenback is gaining while stocks are falling, a correlation breakdown. ECB stimulus previously supported the euro.

EUR/USD News

GBP/USD retreats from highs

GBP/USD is trading below 1.27, off the highs. The pound is struggling after Chief EU Negotiator Barnier reported little progress in Brexit talks. Robust US jobs support the dollar.

GBP/USD News

Gold sees weekly closing below $1700 - a caution for bulls

The steady decline in Gold prices (futures on Comex) accelerated on Friday, as the rates closed the week below the 1700 mark for the first time in three weeks at 1688.35. A weekly closing below the key 1700 level is unlikely to bode well for the bulls.

Gold News

Institutional demand exceeds Bitcoins supply

Greyscale floods the market with fresh money to satisfy the demand of its clients. Investors, willing to pay a 29% surcharge for exposure to Bitcoin without suffering the legal and operational inconveniences. Market remains at risk on the verge of new bullish territory.

Read more

WTI rallies above $39 as focus shifts to OPEC+ meeting

Crude oil prices built on Thursday's modest gains and rose sharply on Friday boosted by the upbeat market mood optimism surrounding Saturday's OPEC+ meeting. 

Oil News

Forex MAJORS

Cryptocurrencies

Signatures