GBP/JPY buyers catch a breath while heading into the key day
- GBP/JPY registers modest changes from Tuesday’s two-month high.
- Uncertainty surrounding Brexit, UK Supreme Court Hearings continue while trade/political news elsewhere support market sentiment.
- UK CPI, FOMC will be crucial catalysts to follow together with trade/political headlines.
Given the recent risk recovery and an absence of developments from the UK, GBP/JPY seesaws around the two-month top while taking rounds to 135.20 during the Asian session on Wednesday.
Recently released August month trade data from Japan suggest that Merchandise Trade Balance shrank lesser than ¥-355.9B expected to ¥-136.3B with the imports and exports declining -12.0% and -8.2% respectively against -11.2% and -10.9% forecasts.
The quote surged to the highest since late-July after expectations of speedy oil production recovery at Saudi Arabia and upbeat trade news pleased the Japanese Yen (JPY) sellers. Also exerting downside pressure is the United Kingdom (UK) Prime Minister (PM) Boris Johnson’s struggle at the Supreme Court where hearings are in line to known whether the PM acted unlawfully while proroguing the Parliament or not.
Further, news reports from the Sky and The Guardian indicate that Tory leaders’ Brexit team have shared draft documents with the European Union (EU) leaders with the cross on the Irish backstop.
Elsewhere, upbeat sentiment surrounding the US-Japan trade deal continues with the latest statement from the White House Adviser Larry Kudlow confirming the bilateral meeting between the US President Donald Trump and Japanese PM Shinzo Abe on September 25.
The traders will be cautious ahead of the key day including the US Federal Reserve’s monetary policy decision that is likely delivering another 0.25% Fed rate cut. Also increasing the importance of the day is the UK Consumer Price Index (CPI) data for August, which is anticipated to decline to 1.9% from 2.1% on YoY while rising to 0.5% from 0.0% on MoM.
Technical Analysis
The pair needs to overcome yesterday’s high surrounding 135.45/50 in order to extend the latest upside towards July 09 high of 136.30, failing to do so can recall 133.90/85 support-area.