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FOREX: GBPJPY Plummets 1.6% as UK Budget Concerns Dominate

FOREX
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  • Spillover from yesterday’s UK Budget detailing more inflationary aspects than expected has pressured the pound on Thursday. Adding this to the sharp weakness for global equity indices, GBPJPY has plummeted 1.6%, erasing a considerable amount of the late October upswing in the process.
  • The moves were potentially exacerbated by a moderately hawkish interpretation of the latest Bank of Japan meeting. Bank of Japan Governor Kazuo Ueda on Thursday left the door open to a rate hike in December, saying downside risks to the U.S. economy had fallen, but noting fresh risks stemming from next week’s presidential election.
  • As such USDJPY is down 0.75% on the session, briefly printing below 152.00 as a technically overbought condition for the pair is allowed to unwind amid the broader pressure on equities.
  • The USD index is just 0.10% in the green as we approach tomorrow’s significant US employment report, emphasising how the moves have been firmly centred around GBP and JPY today.
  • Highlighting the sterling weakness, EURGBP has again traded sharply higher, clearing both the 20- and 50-day exponential moving averages in the process, which represents a strong short-term bullish development. Furthermore, spot has also shown above the next key resistance at 0.8434, the Oct 3 high and a potential trend reversal point.
  • Clearance of this level would strengthen the developing bullish theme and might target a move to downtrend resistance around 0.8550.
  • Swiss CPI cross Friday before the US jobs data. Nonfarm payrolls growth is expected to slow materially to circa 100k in October after a booming 254k in September, with significant disruption from strikes and potential hurricane fallout.
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  • Spillover from yesterday’s UK Budget detailing more inflationary aspects than expected has pressured the pound on Thursday. Adding this to the sharp weakness for global equity indices, GBPJPY has plummeted 1.6%, erasing a considerable amount of the late October upswing in the process.
  • The moves were potentially exacerbated by a moderately hawkish interpretation of the latest Bank of Japan meeting. Bank of Japan Governor Kazuo Ueda on Thursday left the door open to a rate hike in December, saying downside risks to the U.S. economy had fallen, but noting fresh risks stemming from next week’s presidential election.
  • As such USDJPY is down 0.75% on the session, briefly printing below 152.00 as a technically overbought condition for the pair is allowed to unwind amid the broader pressure on equities.
  • The USD index is just 0.10% in the green as we approach tomorrow’s significant US employment report, emphasising how the moves have been firmly centred around GBP and JPY today.
  • Highlighting the sterling weakness, EURGBP has again traded sharply higher, clearing both the 20- and 50-day exponential moving averages in the process, which represents a strong short-term bullish development. Furthermore, spot has also shown above the next key resistance at 0.8434, the Oct 3 high and a potential trend reversal point.
  • Clearance of this level would strengthen the developing bullish theme and might target a move to downtrend resistance around 0.8550.
  • Swiss CPI cross Friday before the US jobs data. Nonfarm payrolls growth is expected to slow materially to circa 100k in October after a booming 254k in September, with significant disruption from strikes and potential hurricane fallout.