Blog: GBP/JPY: Mildly offered below 150.00 amid Brexit, covid woes – Forex Crunch

  • GBP/JPY stands on a slippery ground, rejects Friday’s corrective pullback from monthly low.
  • EU stays tough on the UK, covid fears in Asia battle vaccine hopes.
  • Brexit chatters, virus updates and geopolitics become the key amid a light calendar in Asia-Pacific.

GBP/JPY drops 0.15% intraday while teasing the day’s low of 149.62 amid Monday’s Asian session. The quote bounced off a one-month low of Friday on market sentiment and upbeat UK PMIs, as well as British Retail Sales. However, the corrective pullback couldn’t last long as Brexit jitters join the coronavirus (COVID-19).

The European Union (EU) and the UK jostle over the Northern Ireland (NI) protocol issues during the run-up to sign the Brexit deal ahead of April 27 deadline. As per the latest updates from the UK Times, the EU is reportedly pressing UK PM Johnson to align UK food standards to EU food and safety rules. In return, the EU is offering easing import and export checks between Britain and Northern Ireland.

It should be noted that the UK’s unilateral Brexit actions pushed the bloc towards the legal action on England before a few days.

While the ex-neighbors are likely to remain at crossroads when it comes to Brexit, they both dislike China’s recent actions and may unite over there.

Elsewhere, the news of Japan’s ruling party’s three defeats in by-elections as well as the covid woes in Asia joins the vaccine hopes, mainly after the US lifts ban of usage of the Johnson & Johnson covid jabs, to portray mild risk-off mood.

Amid these plays, S&P 500 Futures drop 0.10%. In doing so, the risk barometer ignores upbeat economic expectations by the BOE policymaker, conveyed during the weekend by The Telegraph.

Moving on, the Brexit updates become the key ahead of this week’s monetary policy meeting by the Bank of Japan (BOJ) and the Bank of England (BOE). Although both the banks are likely to support the extension of the current monetary policy, the recent improvement in statistics, mainly in the UK, can help GBP/JPY to remain positive if the UK and the EU manage to close the Brexit deal on time.

Technical analysis

Not only the previous support line from February 26, around 150.10, but 50-day SMA near 150.30 also challenges GBP/JPY buyers.

 

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