EUR/USD eyes stronger gains, having confirmed a bullish breakout above 1.20 on Tuesday. The dollar loses ground on hopes for a swift global economic recovery on the back of potential coronavirus vaccines. Renewed optimism over the US fiscal stimulus adds to bearish pressures around the dollar.
GBP/USD looks to extend its bullish consolidative mode above 1.3400 into European trading, having hit three-month highs at 1.3440 amid renewed Brexit optimism and broad US dollar weakness. Brexit deal, UK vaccine rollout likely this weekend.
Gold turned south in Wednesday’s Asian trading, having failed to find acceptance above the $1815 barrier. The XAU bulls take a breather, as markets pause after the overnight risk rally, offering some temporary reprieve to the US dollar.
Economists seem to have gotten used to disappointing figures from ADP's jobs report and now expect a modest increase. The calendar is pointing to an increase of 420,000 private sector positions in November.
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The GBP/JPY pair tells the trader how many Japanese Yen (the quote currency) are needed to purchase one British Pound (the base currency). It is known to be a “carry currency cross”, that is a cross which is a vehicle for carry trading (one of today's most popular trading strategies). A carry trade happens when a person sells or borrows an asset with a low-interest rate in order to purchase another asset with a higher interest rate, looking to profit from the underlying interest rate difference. This strategy is heavily used in the foreign exchange market (forex).
HISTORIC HIGHS AND LOWS FOR GBP/JPY
All-time records: Max: 1014.000 on 01/01/1963 - Min: 116.853 on 19/09/2011
Last 5 years: Max: 195.843 on 18/06/2015 - Min: 124.78 on 26/09/2016
Bonds: Gilt (debt securities issued by the Bank of England), GJGB10 (Japan Generic Govt 10Y Yield) and T-Note (Treasury Note, a marketable U.S. government debt security).
Indices: FTSE 100 (share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization), Nikkei 225 (stock market index for the Tokyo Stock Exchange), Dow Jones (DJIA, Dow Jones Industrial Average, an index that shows how 30 large publicly owned companies based in the United States have traded during a standard trading session in the stock market).
ORGANIZATIONS, PEOPLE AND ECONOMIC DATA THAT INFLUENCE GBP/JPY
The organizations and people that affect the most the moves of the GBP/JPY pair are:
Bank of England (BoE), known to be one of the most effective central banks in the world. It acts as the government's bank and the lender of last resort. It issues currency and, most importantly, it oversees monetary policy (including interest rates). Andrew Bailey became the new Governor of the Bank of England on March 16th, 2020. Her Majesty the Queen has approved the appointment. He is widely and deeply respected for his leadership managing the financial crisis, developing the new regulatory frameworks, and supporting financial innovation to better serve UK households and businesses.
Bank of Japan (BoJ) that issues statements and decides on the interest rates of the country. Its Governor is currently Haruhiko Kuroda. The BoJ has been applying very low interest rates for many years and even introduced a negative interest rate in January 2016, in an attempt lift consumer prices, which have been sliding for most of the past 20 years. Falling consumer prices is a concern for the country since they hurt corporate revenues and tend to stop spendings. The Japanese Consumer Price Index (CPI) is a key indicator closely monitored by traders of all JPY-related currency crosses.
UK Government and its Prime Minister, Boris Johnson who took office in July 2019, after British citizens voted for the withdrawal of the UK from the European Union (Brexit).
Japanese Government and its Prime Minister Shinzō Abe, responsible of the so-called “Abenomics” economic policies which are based upon "three arrows" of fiscal stimulus, monetary easing and structural reforms.
UK GDP (Gross Domestic Product), the total market value of all final goods and services produced in a country. It is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Generally speaking, a high reading or a better than expected number is seen as positive for the GBP, while a low reading is negative.