GBPJPY spiked lower on comments from U.K. Prime Minister Boris Johnson who told Britons to, “prepare for No Deal Brexit. The statement came after talks between the EU and Britain broke down once more ahead of the second day of an EU summit.
Traders were not expecting a No Deal statement after the two sides agreed yet another extension to the talks. Johnson is maybe seeking to save face after his red line date for walking away from talks passed without any drama, but the U.K. leader said that there needed to be a “fundamental change of approach” from the European Union negotiators.
In his statement to the press Johnson commented on the desire for an Australian-style deal.
“I have to make a judgement about likely outcome…given [EU] have refused to negotiate seriously for much of the last few months and given this summit appears explicitly to rule out Canada style deal, I’ve concluded we must get ready for arrangements like Australia’s. Unless there’s a fundamental change of approach, we’re going to go to the Australia solution, and we should do it with great confidence”.
Monday will see inflation figures from the U.K. with a reading of 1.1% expected compared to 0.9% last year. The Bank of England had spoken of negative rates being implemented but eventually pulled back on that by saying that conditions were not present to warrant that policy. If inflation was higher in the U.K. then the bank would be forced to reassess the need for rate reductions. Inflation in the U.S., Europe, and Germany all came in as expected in the last week so the U.K. figure is likely to be close to the estimate.
GBPJPY Technical Outlook
GBPJPY spiked lower below the 136.00 but has held that level. This is support but we would need to see a buy signal emerge. For now, the market is under the moving average and the threat is to the downside with support at 134.00. Shorts could place a stop loss around 137.25. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
GBPJPY Daily Chart