GBP/JPY cheers hopes of UK Chancellor Sunak’s further stimulus above 135.00
|- GBP/JPY snaps two-day winning streak to pierce 135.00.
- UK Chancellor Sunak prepares tax cuts, 10 news freeports to combat the virus.
- British Cabinet Minister Gove urges businesses to prepare for Brexit.
GBP/JPY takes the bids to 135.15, up 0.11% on a day, during Monday’s Asian session. The pair recently gained from increasing odds of another stimulus from the UK policymakers. However, news concerning the hard Brexit, virus outbreak and British tussle with China keep the upside guarded.
Having already announced multi-billion pounds of relief measures to counter the coronavirus (COVID-19) led economic slowdown, British Chancellor Rishi Sunak is preparing for another aid package to combat the pandemic. As per the UK Telegraph, “Rishi Sunak, the Chancellor, is preparing to introduce sweeping tax cuts and an overhaul of planning laws in up to 10 new "freeports" within a year of the UK becoming fully independent from the European Union in December, The Telegraph can reveal.”
On the other hand, Cabinet Minister Michael Gove said on Sunday, per Reuters, “At the end of this year we are leaving the single market and Customs Union regardless of the type of agreement we reach with the EU. This will bring changes and significant opportunities for which we all need to prepare.” The diplomat also defends the government’s £705m funding package to help manage Britain's borders, as per the BBC.
Furthermore, a research chief from the UK suggests that there will be enough vaccine for each of the British people in the first half of 2021 if trials succeed. Even so, as per the Independent, Professor Robin Shattock warned there is still no guarantee that its fast-track research will produce an inoculation with immunity against coronavirus.
Elsewhere, global markets remain mildly positive amid hopes of further stimulus from the UK and the US. Additionally, hopes of the pandemic’s cure add strength to the optimism. However, increasing cases from the US becomes the key concern that joins the Sino-American tension to weigh on the risk-tone sentiment.
As a result, S&P 500 Futures print 0.40% gains to 3m190 whereas the US 10-year Treasury yields seesaw around 0.63% as we write.
Looking forward, Brexit will be in the spotlight as the UK and the European policymakers discuss departure terms. Additionally, the cross-party group of investigations on the virus will join the news surrounding stimulus to entertain traders amid a light calendar.
Technical analysis
Unless successfully breaking a 200-day EMA level of 136.20, bulls should remain cautious.
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