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GBP/JPY ignores mixed Brexit headlines amid upbeat market sentiment

  • GBP/JPY stays firm above six-week high amid trade-positive headlines.
  • Traders ignored DUP statements raising barriers for the UK-EU deal.
  • Japanese data, trade news will direct near-term moves amid a lack of UK statistics/events.

GBP/JPY traders seem to shrug-off statements from the Democratic Unionist Party (DUP) as it takes the bids to 133.40 amid initial trading hours of Friday’s Asian session.

Not only initial Brexit pessimism from the comments of the European Parliament President Sassoli turning down any British efforts towards the deal, but the DUP statements showing firm stand on the Irish backstop also added fears of the no-deal Brexit even if the PM Boris Johnson is hopeful of getting a deal during next month’s EU summit.

Arlene Foster, leader of the DUP, recently turned down speculations that the party is allowing leeway to the United Kingdom’s (UK) Prime Minister (PM) concerning the Irish backstop and will not adhere to some European Union (EU) rules after Brexit as anticipated.

This should keep highlighting Irish backstop as the key sticking point for the Brexit discussions that the EU Parliament President says are almost dead from the UK’s side. However, the UK PM Johnson is still hopeful of getting a deal with the EU but stands ready to leave without a deal on October 31.

The GBP/JPY pair showed little reaction to the news as market sentiment remains upbeat supported by the trade-positive headlines from the US President Donald Trump and the Treasury Secretary Steve Mnuchin.

While July month Industrial Production and Capacity Utilization numbers from Japan could offer immediate directions to markets, trade/political headlines will be in the spotlight afterward as no major data/event is up for publishing from the UK’s side.

Technical Analysis

A sustained break above July 18 low of 133.85 becomes necessary for the pair to aim for 135.35/40 area including 100-day simple moving average (SMA) and June month bottom. Meanwhile, a downside break below 132.10 can fetch prices to 50-day SMA level of 131.55 whereas August 22 high surrounding 130.70 could act as a buffer prior to dragging the quote to 130.00 round-figure.

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