- GBP/JPY lifting on thin Asia markets.
- Brexit continues to loom ahead of data-heavy week.
GBP/JPY is testing higher in Tokyo trading, currently on a push over the 149.30 handle.
With China’s banking system off the cards today as the country celebrates Chinese New Year, Asia session markets are thin, with volumes lower than normal and pairs moving at a sedate pace to kick off the new week.
Sterling has suffered at the hands of the Yen’s strength recently, declining for two weeks amidst volatile action. This week will pose a continued challenge for the British Pound, with the UK Telepgraph reporting comments from European (EU) Parliament’s Chief Brexit coordinator Guy Verhofstadt, who stated that the UK will be heading into Brexit day without a finalized trade agreement in place with the EU. Recent economic data from the UK has been a positive note, as has the Bank of England’s (BoE) accelerated rate increase outlook that sees rates lifting as soon as mid-May. With an inflation hearing Tuesday at 09:30 GMT, as well as employment and earnings figures at 09:30 on Wednesday, things are looking up for the GBP, but the upside potential for buyers may be limited as Brexit jitters and bearish pressure in the charts continues to weigh down the Queen’s currency.
The pair may be on the tail-end of a five-month bullish trend, with GBP/JPY declining for ten of the eleven straight trading days, and price inching towards the 200-day SMA at 147.57, and the 34-EMA far above current rates at 151.79. H4 charts show the pair still trading above the floor priced in at 148.92, but bearish pressure is mounting as swing highs continue to squeeze to the downside, with swing highs steadily declining. Support levels can be found at 148.77, 148.62, and 148.11, while resistance is sitting near 149.64 and the 150.00 psychological level.