GBPJPY soared this week from 135.90 to close near 139.75 on Tuesday as vaccine hopes removed safe haven demand. The pair has paused on Wednesday but further gains could be possible on a Brexit deal.
Talks have continued on Brexit in London this week but Bloomberg suggested that they could be extended further than the informal deadline set for this weekend. Brussels was stated as the next destination for the talks to continue but time is running out for a deal and it’s unlikely that either side would drag the talks out this long if they expected a No-Deal scenario to occur by year-end. If we get promising headlines then GBPJPY could see strong gains.
The other issue with a Brexit agreement is the need for it to be formally ratified. Sources have suggested November 19th as a potential date where a deal needs to be presented to the EU. A videoconference invloving the 27 EU leaders is set for that date and it could be formally agreed by Union leaders.
Tomorrow should see volatility in the pound sterling with the release of the country’s third quarter GDP. The market is expecting the UK economy to bounce back from a dismal Q2 showing but recent data points have not been great for the pound. The number will probably go a long way to decide the week’s trend and a bullish tone could set the GBPJPY up for a Brexit push through resistance.
GBPJPY Technical Outlook
GBPJPY has rallied hard with the vaccine news and the pair moved above resistance at 138.00, which capped gains in September and October. Price has gained a good cushion above here and is now looking is now pausing. There’s a good chance that the pair could advance to the 142.72 level from here and a Brexit deal could help that. Traders should be careful of a retest of 138. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.