GBPJPY has been moving higher for six straight days but the pair has been rejected at the 136.50 level and could be set for another move lower. Sterling has been hit by reports that Britain and the EU were still not close to agreeing on the issues of state aid. The EU has also launched a legal case against the U.K. over the controversial Internal Market Bill.
Recent comments from the trade talks had given investors hope that the two sides were getting closer to an agreement after the EU’s Chief Negotiator said there was a “new buzz” surrounding the revived talks. The latest news puts the risk of a No Deal back into the playbook and this will dominate in the next few weeks. Traders are starting to fear that the UK will leave the single market and customs union without a deal when the transition period ends on December 31st.
The Brussels legal case was the start of infringement actions against the UK over breaches of the Withdrawal Agreement previously struck by Boris Johnson. Johnson’s Internal Market Bill sought to tear up elements of that agreement in order to deal with internal trade issues amongst the U.K. nations, particularly Northern Ireland.
The pound saw ISM manufacturing PMIs released today and the figure was lower than expected by 0.2%. Traders had expected a reading of 54.3 but saw 54.1. That is still a strong expansion but the market will focus on Brexit for now.
GBPJPY Technical Outlook
GBPJPY was showing strength with a six day rally but that may have run out of steam at the 136.50 level. If the daily close is bearish then a retreat to the 134.00 level is possible. A close back above 136.00 could see us move higher again. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.
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GBPJPY Daily Chart
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