GBP/JPY remains on a back foot as bears cheer macro political plays
- Not only UK lawmakers’ attempt to block no-deal Brexit but the activity surrounding global politics also entertained Yen buyers.
- British Retail Sales, trade/political news will be in the spotlight.
Given the global political plays keep luring Japanese Yen (JPY) buyers amid Brexit pessimism at the UK, the GBP/JPY pair remains on a back foot around 134.07 amid initial Asian session on Thursday.
The UK lawmakers have already blocked the incoming Prime Minister (PM), Boris Johnson is most likely, from suspending the Parliament till early November in the House of Lords amid fears that the PM might supersede the members’ authority to avail a no-deal Brexit. Also, weighing on the expectations is The UK Times news report that expects the Office for Budget Responsibility’s (OBR) five-year report to forecast the nation’s recession in 2020 if no-deal Brexit takes place.
On the contrary, the JPY initially benefited from upbeat sentiment surrounding the US-Japan trade deal while also taking advantage of the US political and trade woes.
Investors may now watch over the UK Retail Sales figures for June together with the parliamentary voting on the House of Lords’ motion and OBR report. While the further downside is anticipated based on the UK political pessimism and expectations from the OBR report, likely improvement in the UK data to 2.6% from 2.3% (YoY) and -0.3% versus -0.5% (MoM) could challenge the bears.
Only a sustained break of 61.8% Fibonacci retracement of 2016 – 2018 upside, at 136.10, can cut the odds favoring the pair’s gradual declines towards the January month low close to 131.80. If prices rally beyond 136.10, current month high around 136.30 and early-June bottom surrounding 136.50/55 can lure buyers.