GBP/JPY grinds higher past 152.00 amid mixed catalysts, cautious sentiment
- GBP/JPY remains sidelined after rising to a two-week high.
- BOE’s Bailey teases rate hike despite growth worries and Brexit fears.
- Headlines over Evergrande, US stimulus and debt limits question market’s previously positive mood.
- BOJ Minutes, risk catalyst eyed for fresh impulse.
GBP/JPY seesaws inside a 20-pips trading range above 152.00 after refreshing a fortnight high the previous day.
The cross-currency pair offered a positive start to the week amid upbeat sentiment. Mainly driving the moves were chatters that the Japanese government is up for removing the virus-led activity controls in Tokyo and 18 other prefectures on the month-end deadline. Furthermore, easing fears over China’s Evergrande, amid the People’s Bank of China’s (PBOC) hints to keep monetary flow easy, joined US stimulus hopes to favor the GBP/JPY buyers.
However, news that the US Senate Democrats fail to advance on measures to suspend the debt ceiling and extend government funding challenged the mood of late. On the same line were headlines from China suggesting that the Shenzen government is investigating the wealth management unit of Evergrande.
Furthermore, tapering hints from Fed Chairman Jerome Powell and Bank of England (BOE) Governor Andrew Bailey’s sustained support for a rate hike before tapering, despite speaking of growth worries, also challenge the GBP/JPY buyers.
It’s worth noting that news quoting Germany’s Social Democratic Party’s (SDP) Olaf Scholz, the man set to replace Angela Merkel as German chancellor, per the news, while showing further hardships over the UK’s food and fuel crisis. “We worked very hard to convince the British not to leave the union. Now they decided different and I hope they will manage the problems coming from that,” said Scholz per the news.
Amid these plays, S&P 500 Futures print mild losses while the US 10-year Treasury yields stay firmer around 1.49%, near the fresh three-month high flashed the previous day.
Looking forward, Bank of Japan (BOJ) monetary policy meeting minutes and risk catalysts are the key for the GBP/JPY prices. However, chatters over Evergrande and US stimulus, as well as the debt limit, will also be important to follow for fresh direction.
Technical analysis
Despite crossing the 50-DMA hurdle, now support near 151.60, GBP/JPY bulls need validation from a descending trend line from early July and 100-DMA, respectively around 152.30 and 152.75, for further ruling.