After UK Prime Minister May stepped aside last Friday, the battle to replace her is in full swing. Her divided Tory party will now need to narrow the field to two candidates, with former London Mayor and former Foreign Secretary as well as key Brexit figure Boris Johnson in the lead. How will the British Pound perform as the the next leader will be a Brexiteer who is not afraid of a no-deal Brexit? Forex traders will get key UK economic data today which will feature April’s GDP figure as well as a reading on industrial and manufacturing production. A report on the health of the crucial services sector will also be released together with trade data and construction data. Today’s fundamental analysis will cover the GBPJPY which is anticipated to offer the best profit potential during today’s session.

Here are the key factors to keep in mind today for British Pound trades:

• UK GDP: The UK GDP for April is predicted to decrease by 0.1% monthly and to increase by 0.4% for the three-month-over-three-month period ending in April. Forex traders can compare this to the UK GDP for March which decreased by 0.1% monthly and which increased by 0.5% for the three-month-over-three-month period ending in March.
• UK Industrial Production and UK Manufacturing Production: UK Industrial Production for April is predicted to decrease by 1.0% monthly and to increase by 0.9% annualized. Forex traders can compare this to UK Industrial Production for March which increased by 0.7% monthly and by 1.3% annualized. UK Manufacturing Production for April is predicted to decrease by 1.4% monthly and to increase by 2.0% annualized. Forex traders can compare this to UK Manufacturing Production for March which increased by 0.9% monthly and by 2.6% annualized.
• UK Construction Output Seasonally Adjusted: UK Construction Output Seasonally Adjusted for April is predicted to increase by 0.5% monthly and by 3.3% annualized. Forex traders can compare this to UK Construction Output Seasonally Adjusted for March which decreased by 1.9% monthly and which increased by 3.2% annualized.
• UK Trade Balance: The UK Visible Trade Balance for April is predicted at -£13.000B. Forex traders can compare this to the UK Visible Trade Balance for March which was reported at -£13.650B. The UK Trade Balance Non EU for April is predicted at -£4.476B. Forex traders can compare this to the UK Trade Balance Non EU for March which was reported at -£4.361B. The UK Total Trade Balance for April is predicted at -£4.700B. Forex traders can compare this to the UK Total Trade Balance for March which was reported at -£5.408B.
• UK Index of Services: The UK Index of Services for April is predicted to increase by 0.1% monthly and by 0.2% for the three-month-over-three-month period ending in April. Forex traders can compare this to the UK Index of Services for March which decreased by 0.1% monthly and which increased by 0.3% for the three-month-over-three-month period ending in March.

The trading week was started in Japan which featured an economic data heavy calendar. FX trading was kick-started with the final reading on first-quarter GDP out of Japan which showed a downward revision to inflationary pressures. Japan also posted an unexpected trade deficit for April amid the continued global slowdown, but bank lending expanded. The important Eco Watchers Survey slipped deeper into contractionary territory which pressured the Japanese Yen to the downside. Despite the ongoing US-China trade war, China reported a surge in its trade surplus and a rise in exports. This further added to bearish momentum in the Japanese Yen as forex traders booked profits.

Here are the key factors to keep in mind today for Japanese Yen trades:

• Japanese Current Account Balance and Trade Balance: The Preliminary Japanese Current Account Balance for April was reported at ¥1,707.4B. Economists predicted a figure of ¥1,514.5B. Forex traders can compare this to the Japanese Current Account Balance for March which was reported at ¥2,847.9B. The Preliminary Japanese Adjusted Current Account Balance for April was reported at ¥1,600.1B. Economists predicted a figure of ¥1,440.2B. Forex traders can compare this to the Japanese Adjusted Current Account Balance for March which was reported at ¥1,271.0B. The Preliminary Japanese Trade Balance for April was reported at -¥98.2B. Economists predicted a figure of ¥5.0B. Forex traders can compare this to the Japanese Trade Balance for March which was reported at ¥700.1B.
• Japanese GDP: The Final Japanese GDP for the first-quarter increased by 0.6% quarterly and by 2.2% annualized. Economists predicted an increase of 0.6% quarterly and of 2.2% annualized. Forex traders can compare this to the previous Japanese GDP for the first-quarter which increased by 0.5% quarterly and by 2.1% annualized. The Final Nominal GDP for the first-quarter increased by 0.8% quarterly. Economists predicted an increase of 0.8% quarterly. Forex traders can compare this to the previous Nominal GDP for the first-quarter which increased by 0.8% quarterly. The Final GDP Deflator for the first-quarter increased by 0.1% annualized. Economists predicted an increase of 0.2% annualized. Forex traders can compare this to the previous GDP Deflator for the first-quarter which increased by 0.2% annualized. Final Private Consumption for the first-quarter decreased by 0.1% quarterly and Final Business Spending increased by 0.3% quarterly. Economists predicted a decrease of 0.1% quarterly and an increase of 0.5% quarterly. Forex traders can compare this to previous Private Consumption for the first-quarter which decreased by 0.1% quarterly and to previous Business Spending for the first-quarter which increased by 0.3% quarterly.
• Japanese Bank Lending: Japanese Bank Lending including Trusts for May increased by 2.6% annualized and Japanese Bank Lending excluding Trusts increased by 2.8% annualized. Forex traders can compare this to Japanese Bank Lending including Trusts for April which increased by 2.4% annualized and to Japanese Bank Lending excluding Trusts which increased by 2.5% annualized.
• Japanese Eco Watchers Survey: The Japanese Eco Watchers Survey Current Index for May was reported at 44.1 and the Japanese Eco Watchers Survey Outlook Index was reported at 45.6. Economists predicted a figure of 45.4 and of 48.0. Forex traders can compare this to the Japanese Eco Watchers Survey Current Index for April which was reported at 45.3 and to the Japanese Eco Watchers Survey Outlook Index which was reported at 48.4.

Should price action for the GBPJPY remain inside the or breakout above the 137.750 to 138.700 zone the following trade set-up is recommended:

• Timeframe: D1
• Recommendation: Long Position
• Entry Level: Long Position @ 138.000
• Take Profit Zone: 141.000 – 142.200
• Stop Loss Level: 137.500

Should price action for the GBPJPY breakdown below 137.750 the following trade set-up is recommended:

• Timeframe: D1
• Recommendation: Short Position
• Entry Level: Short Position @ 137.500
• Take Profit Zone: 135.800 – 136.550
• Stop Loss Level: 138.000

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