GBP Forecast – GBP/JPY, GBP/USD to Face Brexit

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GBP/JPY is also struggling to rise above the 50-DMA, this is despite the increase in buying pressure from the pitchfork parallel support.

GBP/JPY, GBP/USD, Bank of England – Talking Points

Asia- Pacific Recap

Throughout the entire Asia–Pacific trade, risk appetite seemed like fading between the haven-linked USA Dollar and the Japanese Yen. S&P 500 futures slightly declined while on the other hand, the gold continued to gain fresh yearly highs every month this year as it bounced back above $ 1,780.

Data from Caixin PMI in China showed very little effort to ignite the market optimism despite rising above the expectation. The manufacturing pace growth retained a six month high. The ASX 200 outshines most of its Asia pacific trade partners, this occurred after the announcement of the possible introduction of key stimulus measures. Nikkei 225 declined as well with over 1 % after Japan’s Tankan index bank collapsed to an 11 year low.

Germany and France’s final manufacturing prints will assess the economic rebound progress in the EU (European Union). Employment numbers (USA ADP) are as well on the tap.

GBP/JPY

GBP/JPY

Lack of Spelling Danger for the UK and Record Contraction

Due to the disappointing economic data and Brexit uncertainty, the British Pound continues to suffer making it lag behind its fellow G10 counterparts.

The decision of Boris Johnson of sticking to the recent Brexit timeline has significantly helped, failing to ratify an official trade deal with the EU, by the end of this year may turn out to be a disaster in the island nation.

In addition to this, the local economy shrank to 2.2% in the first months of 2020.

United Kingdom Quarterly GDP Growth Rate

In the second quarter recap from Haldane’s, his description harked back to the concept of Maynard Keyne (the paradox of thrift) coined during the 1930s Great Depression.

As stated by different central bankers from all around the globe, from the Reserve bank of Australia to the Federal Reserve, gain in consumer evidence determines the strength and speed in the recovery of the economy.

Concerning the case in the United Kingdom, a rise in precautionary savings has been caused by uncertainty and low household consumption.

In the UK, there will be more hurt to come if the citizens fail to spend more than they are used to, this is according to the words of the Prime Minister Boris Johnson.

GBP/USD

Descending channel resistance might proceed to the corral price, this will force the USD to bounce back to 38.2% Fibonacci (1.2175).

GBP/JPY is also struggling to rise above the 50-DMA, this is despite the increase in buying pressure from the pitchfork parallel support.

If the 50 DMA and 78.6 Fibonacci converge, it might cap potential upside while the improvement of the two technical indicators will signal the path of the lowest resistance on the downside.

Moreover, the RSI might give some assurance if the GBP bull remains contained.

A decline in May (1.140) may be pivotal for bears, opening a new path to march low.

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