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GBP/JPY: off lows despite G7 disaster, eyes UK manufacturing data

6/11/2018, 10:20:17 AMMarket Analysis
GBP/JPY: off lows despite G7 disaster, eyes UK manufacturing data

The West is in crisis after a rancorous G7 meeting. The US President Trump withdrew his signature from the summit's G7 communique that called for fair and balanced trade.

Consequently, the anti-risk Japanese Yen picked up a bid in early Asia. The GBP/JPY opened at 146.54 vs. Friday's close of 146.82 and looked set to extend the losses on trade war fears.

However, things have not panned out like the JPY bulls would have wanted. As of writing, the cross is trading at 146.80, having clocked a session high of 146.95 earlier today.

Focus on stocks

The uptick will likely be short lived if the stock markets across the globe react to G7 disaster in a negative manner. Currently,  the S&P 500 futures are reporting moderate losses (down 0.16 percent), indicating the index will likely open on a negative note.

But we could be in for a positive surprise as China reported a better-than-expected producer price index (PPI) on Saturday. The uptick in Chinese PPI or factory-gate inflation is supportive of risk assets, although the good news could be overshadowed by trade tensions.

UK data due at 08:30 GMT

The UK Office for National Statistics (ONS) is seen reporting a 0.3 percent month-on-month rise in manufacturing production in April. Meanwhile, the goods trade deficit is seen narrowing to GBP 11.250 billion in April from GBP 12.287 billion in May. An above-forecast data could strengthen the bid tone around GBP.

GBP/JPY Technical Levels

Resistance: 147.13 (5-day moving average), 148.11 (recent high), 148.38 (April 2 low).

Support: 146.52 (session low), 146.13 (10-day moving average), 145.27 (May 25 low).