GBP / JPY in range – what to expect?

GBP / JPY consolidated in the early European session and fell to a new low during the day, close to 153,500 in the last hour.

The cross is trying to find a clear direction by trading in a range between 152,500-154,200. Concerns about the growing number of COVID-19 cases in Europe and the re-imposition of blocking measures continued to weigh on investor sentiment. This was evident from the softer tone around the stock markets, which led to some security flows to the Japanese yen and proved to be a key factor that triggered new sales around the GBP / JPY pair.

On the other hand, the deadlock over the post-Brexit agreement in Northern Ireland and fishing rights continued to hurt the British pound. A senior German diplomat called on the United Kingdom to abide by the Protocol on Northern Ireland and warned that the dispute was not a game. French fishermen have reportedly planned to block British ships’ access to French ports in protest of Britain’s refusal to grant them more licenses to work in UK territorial waters.

Meanwhile, the pair’s inability to gain any significant power suggests that the forthcoming rise in interest rates by the Bank of England in December is fully priced in the markets.

This in turn favors bear traders and supports the prospect of a further short-term decline in GBP / JPY. In the absence of any major market economic communications, broader market risk sentiment and Brexit-related headlines will be considered for some short-term trading opportunities.

GBP / JPY chart:

The GBP / JPY chart shows that the pair is in the range and at a break of 154,200 the price would potentially start a new upward movement.

Alternatively, closing below the level of around 152,400 and breaking the trend line will be an indication of a deeper decline. The price remains in its range trading until a clear break is formed.

 Varchev Traders


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