GBP/JPY is seeing subdued trade, with prices not deviating too far from the 50-day moving average (which currently resides just under 153.20). The pair seems to have found some support ahead of the September highs in the 152.50-1.5300 region. To the upside, the 2 November low at 154.70 and the 21DMA at 155.80 are the most notable areas of resistance.

The pair had dropped more than 2.0% from early Thursday highs above 156.00 to Friday lows under 153.00, with the sharp decline triggered as the Bank of England wrong-footed investors by opting not hike interest rates by 15bps and sounding much more dovish thank expected with regards to the potential for rate hikes over the coming years. But GBP/JPY is seeing a modest rebound on Monday and has now clambered back to the north of the 153.50 level, despite the ongoing presence of UK/EU tensions.

UK press reported over the weekend that the UK is set to trigger Article 16, a clause that allows the UK (or EU) to unilaterally suspend parts of the Northern Ireland protocal if its implementation is causing significant societal damage. A final decision will be taken by the end of the month, the reports suggested. EU leaders have warned in recent weeks that such a move by the UK could lead to the EU suspending the entirety of its existing trade deal with the UK. A suspension of the post-Brexit free-trade deal of represents a downside risk to a UK economy already struggling with supply chain turmoil, high energy costs and a sharp recent drop in fiscal stimulus after the expiry of the government’s employee furlough scheme.

This Week

Focus returns to the Bank of England on Monday, with Governor Andrew Bailey partaking in a Q&A session from 1700GMT. Looking ahead to the rest of the week, the main event for sterling traders will be the release of the preliminary estimate of Q3 GDP data at 0700GMT on Thursday. Yen traders, meanwhile, will keep an eye on a steady trickle of data releases, including September trade and current account metrics and the Eco Watchers Survey on Tuesday and October Producer Price Inflation on Thursday.

This article was originally published by Fxstreet.com.Read the original article here.

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