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JPY: Knocked By Brexit & Covid-19

GBP

GBP/JPY has been knocked on its head by the double-whammy of continued Brexit stalemate and the spread of a new coronavirus strain/tighter lockdown restrictions in the UK. The pair has shed 1.55 fig. and trades at Y138.15 as we type.

  • A UK gov't official told the press that "talks [with the EU] remain difficult and significant differences remain." Negotiations will resume later today.
  • Meanwhile, UK gov't scrapped plans to relax social restrictions over the Christmas period and placed London & Southeast England under strict "tier 4" lockdown in a bid to contain the spread of a more infectious strain of coronavirus detected in the area.
  • The rate gapped lower at the re-open and extended losses, despite the recent bullish 50-/100-DMA crossover. Bears would be pleased by a dip through Dec 11 low of Y136.80 before targeting Nov 5 low of Y135.09. On the flip side, a move through Dec 17 high of Y140.47 would draw attention to Dec 4 high at Y140.71.
  • Looking ahead, the UK reports final Q3 GDP data tomorrow.
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