The G-20 Summit in Osaka has begun and market participants await news from the outcome of working sessions. More important than official meetings are the bilateral sidelines meetings which could have an impact on markets when Asia kicks off the new trading week on Monday. The leadership for the next British Prime Minister is also on minds of forex traders, with Boris Johnson holding on to a narrow lead. The GBPJPY has started a sideways trend at strong support levels, will price action attempt a breakout on the back of a short-covering rally or will bears pressure for more downside? Today’s fundamental analysis will explore both possibilities.
Here are the key factors to keep in mind today for British Pound trades:
- UK GfK Consumer Confidence: UK GfK Consumer Confidence for June was reported at -13. Economists predicted a figure of -11. Forex traders can compare this to UK GfK Consumer Confidence for May which was reported at -10.
- UK Lloyds Business Barometer: The UK Lloyds Business Barometer for June was reported at 13. Forex traders can compare this to the UK Lloyds Business Barometer for May which was reported at 10.
- UK GDP and UK Total Business Investment: The final UK GDP for the first-quarter is predicted to increase by 0.5% quarterly and by 1.8% annualized. Forex traders can compare this to the previous UK GDP for the first-quarter which increased by 0.5% quarterly and by 1.8% annualized. Final UK Total Business Investment for the first-quarter is predicted to increase by 0.5% quarterly and to decrease by 1.4% annualized. Forex traders can compare this to the previous UK Total Business Investment for the first-quarter which increased by 0.5% quarterly and which decreased by 1.4% annualized.
- UK Current Account Balance: The UK Current Account Balance for the first-quarter is predicted at -£32.0B. Forex traders can compare this to the UK Current Account Balance for the fourth-quarter which was reported at -£23.7B.
Japan, the host of the G-20 summit, reported a contraction in industrial production on an annualized basis which has further eroded a bullish case for the Japanese Yen. Housing starts contracted more than expected in a troubling sign for the already struggling consumer. Countering negative economic data is the uncertainty of bilateral talks this weekend which is positive for the Japanese Yen as it is considered a safe haven currency. How will tomorrow’s official end of the G-20 summit impact forex trading strategies and the GBPJPY?
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese Jobless Rate and Job-to-Applicant Ratio: The Japanese Jobless Rate for May was reported at 2.4% and the Job-to-Applicant Ratio at 1.62. Economists predicted a figure of 2.4% and of 1.63. Forex traders can compare this to the Japanese Jobless Rate for April which was reported at 2.4% and to the Job-to-Applicant Ratio which was reported at 1.63.
- Japanese Industrial Production: Preliminary Japanese Industrial Production for May increased by 2.3% monthly and decreased by 1.8% annualized. Economists predicted an increase of 0.7% monthly and a decrease of 2.9% annualized. Forex traders can compare this to Japanese Industrial Production for April which increased by 0.6% monthly and which decreased by 1.1% annualized.
- Japanese Housing Starts: Japanese Housing Starts for May decreased by 8.7% annualized .Economists predicted a decrease of 4.3% annualized. Forex traders can compare this to Japanese Housing Starts for April which decreased by 5.7% annualized.
Should price action for the GBPJPY remain inside the or breakout above the 136.000 to 136.700 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 136.400
- Take Profit Zone: 139.700 – 140.700
- Stop Loss Level: 135.400
Should price action for the GBPJPY breakdown below 136.000 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 135.400
- Take Profit Zone: 132.450 – 133.450
- Stop Loss Level: 136.000
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