GBP/JPY looks for fresh clues as short-term resistance trendline restricts latest pullback
- GBP/JPY fails to hold on to recovery gains amid a lack of major catalysts.
- Japanese Inflation, UK Parliament vote on PM’s election motion will be the key to watch.
While Monday’s risk-on enabled GBP/JPY to stop the previous two-day declines, the quote awaits fresh catalysts to extend the latest recovery while trading around 140.10 during the early Asian session on Tuesday.
The pair recently benefited from the European Union’s (EU) formal notification of Brexit extension till January 31, 2020, while upbeat sentiment surrounding the next level of the US-China trade talks, during early November in Chile, added strength to market optimism.
During the initial Asian morning on Tuesday, the United States’ Trade Representative’s (USTR) office announced to consider certain tariff exclusions on $34 billion of Chinese imports from November 01. The said relaxation will last for twelve months and will include items that were granted last December and are set to expire on December 28, 2019. The news increased odds of a successful trade deal between the global super-powers when they meet in Chile.
On the other hand, The Sun came out with the news, citing anonymous sources, while saying that the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson is prepared to curtail the election date, to December 09 or 10, to let his motion pass through the Commons after failing to gain support during the previous day. The Commons Leader Jacob Rees Mogg recently stated that the Withdrawal Agreement Bill (WAB) will not return to the house while giving assent to the voting on election bill on Tuesday.
Looking forward, traders will be more inclined to follow the October month Tokyo Consumer Price Index (CPI) data from Japan whereas trade/Brexit headlines will keep the driver’s seat during the days to come.
Technical Analysis
On a sustained break above 140.15 resistance line, prices could challenge the latest high surrounding 141.50. However, a downside break below 138.87 might not refrain from visiting June month high around 138.30.