The GBPJPY is lower on the day and is threatening a larger move lower as the Bank of Japan gets set to meet with their latest interest rate decision. The central bank is not expected to move on rates but with recent weakness in inflation a surprise cannot be ruled out completely.
The Yen is seeing safe haven flows versus European currencies as the coronavirus sees a second outbreak in the continent. As a comparison, Japan was seeing 540 cases of the virus on Monday, while France alone, had logged 52,000 cases on Sunday and the U.K had 22,000 on Tuesday. This dynamic could see the Yen continue to gain as the GDP expectations for the Asian nation will be buffered from the virus fallout.
The BoJ are expected to hold rates steady at -0.1% on Thursday but they could extend the deadline for virus-linked funding and asset purchases. The new Prime Minister Yoshihide Suga has his government working on a budget to support the economy and reports expect this to be around JPY10 trillion ($95.5 billion) coming in mid-December.
Brexit talks are still a threat to the pound’s valuation with the EU Council President still not sounding hopeful yesterday, saying:
“We all know that in all negotiations, the last and final decisions are the most difficult. Will we get a deal? I don’t know…”
GBPJPY Technical Outlook
The GBPJPY has been edging lower after a failure to get through resistance ahead of the 138.00 level. The market is now below support at 136.00 and could head lower to test the 133.00 mark. Shorts could place a stop above 136.00. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
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GBPJPY Daily Chart
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