- Despite positive outlook for GBP, Yen is the currency of choice as markets capitulate.
- A thin week for data is leaving risk sentiment firmly in the driver's seat.
The GBP/JPY is heading lower in the early Tokyo session as traders pile back into the Yen on risk aversion and the pair is currently testing the 147.90 area.
Risk aversion is the primary market mover once again to kick off Thursday, and the Yen is trading higher as the safe haven retains its popularity as global markets continue to be cowed by saber-rattling and threats of an ensuing trade war following Trump's recent steel and aluminum tariffs.
The Sterling's outlook is looking better every day, with the UK's budget report this week highlighting the optimistic growth and the Bank of England (BoE) on track to begin lifting interest rates soon. Brexit concerns are still plaguing the UK, but are beginning to ease as a tentative EU-UK trade deal may be on the cards; more is expected following an announcement at an EU summit at the end of the month.
Asia markets need little help losing risk appetite lately, with major economies across the Pacific struggling to encourage economic growth to a consistent enough level that interest rates can begin lifting. Fears of a trade war between the US and China are doing little to help matters, and Japan is stuck in the middle of a political scandal that sees the Prime Minister, Shinzo Abe, selling off government land at a steep discount to a school operator with ties to Abe's wife, and Finance Minister Taro Aso forging documents to cover their tracks.
With little of note on the macro calendar for either currency, overall market sentiment will continue to drive the action as the safe haven Yen drives higher up the charts as traders flee riskier assets.
GBP/JPY Technicals
The pair looks set to price in a new lower high on Daily candles as it falls back to the 200-day SMA. March's push upwards following February's steady decline was unable to produce enough drive to kick the bearish potential out of the pair, and the GBP/JPY looks set to continue falling as the Yen gains across the board. Support is coming from last week's swing lows of 146.25 and 145.30, with resistance priced in from the current high point of 149.35 and February's swing high of 150.90.
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