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GBP/JPY: Sellers concentrate on Brexit drama ahead of UK retail sales, BOE

FXstreet.com Thursday, 21 March 2019
· *Brexit developments weigh on trade sentiment, British retail sales and BOE meeting gain market focus amid a holiday in Japan.*
· *Near-term support-line and 200-day SMA appear on sellers’ radar after recent weakness.*

The GBP/JPY pair trades near 146.15 while heading into European open on Thursday. The pair dropped heavily during late-Wednesday and carried the weakness overnight as developments surrounding Brexit continued magnifying uncertain times ahead for the UK’s departure from the EU. While Tokyo markets are off for Vernal Equinox Day, British retail sales and Bank of England (BoE) monetary policy meeting will be closely followed for fresh impulse.

Headlines ranging from speculations that the French PM would use the veto to stop Brexit deadline extension to opposition Labour party leader, Jeremy Corbyn’s, walk out of the cross-party meeting continued fuelling the British Pound (GBP) moves on Wednesday. Among them, report that the UK PM Theresa May has submitted a request to the EU Council President Donald Tusk for three month Brexit extension from March 29 and Tusk’s comments favoring short extension based on the UK’s House of Common’s approval gained major attention.

Even if no-deal Brexit is rejected and the British lawmakers favored deadline extension from March 29, it all depends upon the EU summit as a rejection of one EU member with veto could push the UK out of the region on time. Hence, uncertainties surrounding Brexit kept dragging the GBP downwards.

Investors may now concentrate on February month retail sales figures from the UK in addition to the BOE monetary policy meeting report. The retail sales figures are likely to add further worries on to the Pound buyers as monthly growth is expected to shrink by -0.4% versus +1.0% earlier while YoY increase might also soften to 3.3% from 4.2%.

The BOE Isn’t expected to alter any monetary policy actions that offer interest rate at 0.75% and the Quantitative Easing program at £435 billion. Though, minutes of the latest meet will be closely observed for clues concerning how Brexit weighs on the central bank’s future policy guidance.

*GBP/JPY Technical Analysis*

Eleven-week old ascending trendline at 145.00 next to 200-day simple moving average (SMA) figure of 144.70 become important supports for the GBP/JPY pair.

On the contrary, 148.30, six-month-long resistance-line at 148.80 and 149.00 could keep challenging the buyers ahead of pleasing them with 150.00.
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