GBP/JPY: Depressed below 140.00, eyes on Brexit talks
- GBP/JPY remains mildly offered near two-week low amid Brexit woes, risk-reset.
- EU’s Barnier hints leaving the Brexit talks if UK pushes for changing divorce agreement.
- Japan’s GDP remains sluggish, beats disappointing forecasts of -8.1% with -7.8%.
- Risk catalysts to remain as the key amid a light calendar.
GBP/JPY grinds lower around 139.70, down 0.12% on a day, during the early Tuesday’s trading. The pair recently dropped amid Brexit woes as the UK’s push for altering Brexit legislation and October 15 deadline irritated the European Union (EU) policymakers. Additionally, upbeat catalysts for the Japanese yen also favor the pair’s downside.
Brexit woes please sellers ahead of Tuesday’s talks…
Having initially ignored UK PM Boris Johnson’s October 15 deadline for the Brexit trade deal, the EU policymakers started opposing the British signals to alter the divorce agreement. In the latest move, as per the UK Express, “The EU chief negotiator was left furious today about British proposals for fine-tuning customs rules. Mr. Barnier claimed to be on the brink of walking out of the negotiations on a UK-EU trade in protest at the move, accusing the Prime Minister of ripping up his promise not to allow a hard border in Northern Ireland.” The UK and the EU Brexit negotiators are scheduled to talk about the trade deals for the eighth time in London starting from Today.
On the other hand, Japan’s final reading of the second quarter (Q2) flashed better than forecast and initial estimation with -7.8% figures. The data pushed Japanese Economy Minister Nishimura to say that the economy is showing signs of recovery.
Elsewhere, the Sino-American tension escalates following China’s fresh visa restrictions for the American news reporters. Additionally, the India-China border tussle is also getting fierce after New Delhi fired shots against China and the dragon warned in turn.
Against this backdrop, the S&P 500 Futures and Nikkei 225 gain around 0.50% while the US 10-year Treasury yields consolidate Friday’s heavy gains above 0.71% by the press time.
With the US traders slated to return from the Labor Day Holiday, risk catalysts are likely to gain major attention.
Technical analysis
The pair’s clear break of the 21-day SMA and an ascending trend line from June 29 drags it towards August 21 low near 138.25.