Although GBP/JPY is stable with gains closer to resistance level at 147.00, the continuation of this move will depend on any positive developments for Brexit. Britain’s job market remains strong despite the unknown fate of the country’s exit from the EU. The pound did not react very much with the EU agreeing to postpone Brexit until the end of October instead of the date of the previous postponement, because Britain’s internal political division may hinder May’s efforts to get the Brexit deal approved to ensure that the country does not leave the union without an agreement, which will be catastrophic for the British economy and the pound sterling. The pair’s recent gains supported by risk appetite and the abandonment of safe haven led by the Japanese yen amid growing optimism that the US-China deal is close to ending their fierce trade war.
Britain’s economic growth slowed down, while the manufacturing sector rebounded. So far, the May government has not been able to obtain parliamentary approval for the Brexit deal. For the third time in a row, the British House of Commons rejected the Brexit deal even after it was amended, adding to pressure on May and her government. British gross domestic product (GDP), unchanged as expected. In contrast, the Japanese TANKAN survey data confirm the Japanese economy’s vulnerability to the US-China global trade war.
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Losses of GBP didn’t stop. Brexit’s developments are many, successive and contradictory. It was normal for the pound to depreciate against other major currencies.
Technically: GBP/JPY correction and stability above 140.00 psychological resistance will support the continuation of the pair’s upward trend and have tested all the levels we have anticipated in the previous analysis. Currently, the nearest resistance areas are 146.50, 147.80 and 150.00 respectively. On the downside, the nearest support levels are 145.45, 144.20 and 143.00 respectively. It remains best to sell this pair at every rebound, as the pound’s future remains uncertain as negotiations continue to push Britain out of the European Union.
In today’s economic data: The pair will watch the UK data releases; consumer prices and producer prices and later remarks by Governor of the Bank of England Carney. The pair will be in a state of anticipation and waiting for Brexit’s negotiations. It will also focus on the uptake of safe havens.