The GBPJPY has given up the recent uptrend in price and has broken below key resistance with the threat of further losses ahead. The pound has been under pressure since Boris Johnson threatened to walk away from Brexit talks if an agreement wasn’t reached by the October deadline. This brought the talks back to brinksmanship after hedge funds had recently upped their bets on the pound in expectation of an agreement.
The U.K. economy saw further negative news today with a rise in unemployment. Analysis from the National Institute of Economic and Social Research (NIESR) on Monday said that unemployment levels could reach 9.8% in the last quarter of 2020. The latest figures come as pressure mounts on the government to extend the furlough which is probably a done deal. The government has proposed extending the scheme to companies with a viable chance of surviving so they are obviously aware that the furlough scheme is propping up zombie companies who will not trade once the scheme is ended.
Boris Johnson’s controversial bill to tear up part of the Brexit treaty with the European Union has passed the first parliamentary hurdle, despite a rebellion from Tory MPs and criticism from politicians and previous Prime Ministers.
The Internal Market Bill passed with 340 votes to 263 after its second reading in the House of Commons. The latest developments bring the potential of a No Deal Brexit closer and markets are starting to adjust their price expectations accordingly. The Yen has always been a safe haven for currency for investors and this dynamic will be pronounced against the pound in the coming weeks if Brexit talks continue to produce a stalemate.
GBPJPY Technical Outlook
The recent highs at 142.00 have capped the uptrend and price has dropped below the support of the price channel. This highlights the risk of further downside in the GBPJPY. Support is available around the 132.00 to 134.00 levels and the recent move lower is hinting at heavy price action with a corrective nature. The Investing Cube team can help traders with their own trend-spotting in the markets. The Trading Course or one-to-one virtual Coaching can help with your trading.