- GBP/JPY looks to post solid gains on Friday having bounced from earlier sub-152.00 levels, but failed to hold above 153.00.
- The 200DMA in the 153.20s plus waning risk appetite on during US hours amid geopolitical worries weighed on the pair.
GBP/JPY upside on Friday has waned somewhat since the start of US trade, with the pair failing an earlier session attempt to break back above its 200-Day Moving Average in the 153.20s and eventually falling back below the 153.00 level. US session weakness coincided with a downturn in risk appetite (US stocks erased pre-market gains and are now in the red across the board).
Market commentators cited a waning of optimism sparked by earlier commentary from Russian President Vladimir Putin who noted “positives” in talks with Ukraine after Ukraine’s Foreign Minister said “zero” progress had been made at talks on Thursday. Western nations also announced fresh measures to punish Russia for its invasion of Ukraine and updates from the ground suggest intense fighting continues, with Russia accused of committing multiple war crimes and civilians still struggling to escape some besieged towns.
GBP/JPY still looks set to finish the day about 0.6% higher, having bounced from sub-152.00 Asia Pacific session lows, in part thanks to a much stronger than expected January UK GDP growth update. But uncertainties regarding the war in Ukraine look set to continue hanging over sentiment, suggesting a break above the 200DMA may be difficult next week.
Aside from geopolitics, GBP/JPY traders will also have to keep an eye on UK jobs data on Tuesday, followed by a BoE rate decision on Thursday and BoJ rate decision on Friday. Traders are flagging downside risks for GBP heading into next week’s meeting, with risks that the bank fails to hike rates by 25bps as markets currently expect, or offers up a much more cautious tone in its policy statement given Ukraine-related uncertainties.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.