As Japan is waging its own trade dispute with South Korea, the second-quarter GDP surprised to the upside on the back of a surge in business spending. The Japanese consumer, in its usual fashion, lagged behind. Despite the upside surprise, forex traders kept the GBPJPY hovering at a string support level. The Bank of Japan vowed to defend excessive Japanese Yen strength and the British Pound started to show signs of downside exhaustion. Is this currency pair on the verge of a short-covering rally? Today’s fundamental analysis will take a look at the upside potential and the downside risk over the next few trading sessions.
Forex traders will get a range of key UK economic data, with GDP front and center. Economists predict a flat reading annualized for the second-quarter, can the UK GDP surprise to the upside like the Japanese one did? Industrial and manufacturing data is anticipated to show contractions across the board as a no-deal Brexit is becoming more likely. Economists agree that businesses are slowing down activity until after Brexit. Will today’s data agree with them? How did the powerful UK services sector fare? The GBPJPY started to grind out a bottom, is now the time to go long? Follow the PaxForex Daily Fundamental Analysis and earn more pips per trade!
Here are the key factors to keep in mind today for British Pound trades:
- UK GDP: The UK Preliminary GDP for June is predicted to increase by 0.1% monthly. Forex traders can compare this to the UK GDP for May which increased by 0.3% monthly. The UK Preliminary GDP for the second-quarter is predicted flat at 0.0% quarterly and to increase by 1.4% annualized. Forex traders can compare this to the first-quarter GDP which increased by 0.5% quarterly and by 1.8% annualized. Private Consumption for the second-quarter is predicted to increase by 0.4% quarterly, Government Spending is predicted to increase by 0.3% quarterly and Gross Fixed Capital Formation is predicted to decrease by 0.4% quarterly. Forex traders can compare this to first-quarter Private Consumption which increased by 0.7% quarterly, to Government Spending which increased by 1.4% quarterly and to Gross Fixed Capital Formation which increased by 2.1% quarterly. UK Exports for the second-quarter are predicted to decrease by 2.1% quarterly and UK Imports are predicted to decrease by 9.2% quarterly. Forex traders can compare this to first-quarter UK Exports which were reported flat at 0.0% quarterly and to UK Imports which increased by 6.8% quarterly. UK Total Business Investment for the second-quarter is predicted to decrease by 0.5% quarterly and by 1.7% annualized. Forex traders can compare this to UK Total Business Investment for the first-quarter which increased by 0.4% quarterly and which decreased by 1.5% annualized.
- UK Industrial Production and UK Manufacturing Production: UK Industrial Production for June is predicted to decrease by 0.2% monthly and by 0.3% annualized. Forex traders can compare this to UK Industrial Production for May which increased by 1.4% monthly and by 0.9% annualized. UK Manufacturing Production for June is predicted to decrease by 0.2% monthly and by 1.1% annualized. Forex traders can compare this to UK Manufacturing Production for May which increased by 1.4% monthly and which was reported flat at 0.0% annualized.
- UK Construction Output Seasonally Adjusted: UK Construction Output Seasonally Adjusted for June is predicted to decrease by 0.4% monthly and increased by 0.2% annualized. Forex traders can compare this to UK Construction Output Seasonally Adjusted for May which increased by 0.6% monthly and by 1.7% annualized.
- UK Index of Services: The UK Index of Services for June is predicted to increase by 0.1% monthly and by 0.2% for the three-month-over-three-month period ending in June. Forex traders can compare this to the UK Index of Services for May which was reported flat at 0.0% monthly and which increased by 0.3% for the three-month-over-three-month period ending in May.
- UK Trade Balance: The UK Visible Trade Balance for June is predicted at -£11.800B. Forex traders can compare this to the UK Visible Trade Balance for May which was reported at -£11.524B. The UK Trade Balance Non EU for June is predicted at -£5.000B. Forex traders can compare this to the UK Trade Balance Non EU for May which was reported at -£4.905B. The UK Total Trade Balance for June is predicted at -£2.600B. Forex traders can compare this to the UK Total Trade Balance for May which was reported at -£2.324B.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese Money Stock M2+CD and Japanese Money Stock M3: Japanese Money Stock M2+CD for July increased by 2.4% annualized and Japanese Money Stock M3 increased by 2.0% annualized. Economists predicted an increase of 2.3% and of 2.0%. Forex traders can compare this to Japanese Money Stock M2+CD for June which increased by 2.3% annualized and to Japanese Money Stock M3 which increased by 2.0% annualized.
- Japanese GDP: The Preliminary Japanese GDP for the second-quarter increased by 0.4% quarterly and by 1.8% annualized. Economists predicted an increase of 0.1% quarterly and of 0.5% annualized. Forex traders can compare this to the Japanese GDP for the first-quarter which increased by 0.7% quarterly and by 2.8% annualized. The Preliminary Nominal GDP for the second-quarter increased by 0.4% quarterly. Economists predicted an increase of 0.1% quarterly. Forex traders can compare this to the Nominal GDP for the first-quarter which increased by 1.0% quarterly. The Preliminary GDP Deflator for the second-quarter increased by 0.4% annualized. Economists predicted an increase of 0.3% annualized. Forex traders can compare this to the Preliminary GDP Deflator for the first-quarter which increased by 0.1% annualized. Preliminary Private Consumption for the second-quarter decreased by 0.6% quarterly and Preliminary Business Spending increased by 1.5% quarterly. Economists predicted an increase of 0.7% and of 1.8%. Forex traders can compare this to Private Consumption for the first-quarter which increased by 0.1% quarterly and to Business Spending for the first-quarter which increased by 0.4% quarterly.
Should price action for the GBPJPY remain inside the or breakout above the 128.100 to 129.300 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 128.650
- Take Profit Zone: 143.800 – 144.800
- Stop Loss Level: 127.800
Should price action for the GBPJPY breakdown below 128.100 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 127.650
- Take Profit Zone: 125.450 – 126.100
- Stop Loss Level: 128.100
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