Daily Market Insights

 
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17/5/2017
GBP/JPY

Pound Declines against Yen

The United Kingdom joined Europe as a champion of key EU policies in the single market, but we have been told repeatedly that Brexit actually means that the UK has invoked Article 50 of the Treaty of Lisbon. The UK has been giving some of its reasons for leaving, and we can begin to give some input on how the process will happen in the next few years.

We know that the divorce will not be easy. British Prime Minister Theresa May has opted for a "hard Brexit." She has been very clear on controlling immigration and leaving the European Court of Justice's jurisdiction. And with her Conservative Party general election on June 8, and favor a win for Theresa May the UK will stay the plan. May's government will have the terms and conditions for the new UK-EU partnership for the terms of the divorce. It can be said that the UK will officially leave the EU by the end of March 2019.

The UK will look for a number of new agencies for issues that are currently being over looked by the EU, UK's top priorities will be to maintain its economic relationship with the EU and uphold the demand from the EU. UK must decide if it still wants to be a part of Europe, outside of the EU; or Brexit.

Japan's value of machinery orders received some support with Japan orders rose by 1.3% in March, Private-sector machinery orders also increased a by 1.4% in March.

GBP/JPY is testing a key area of interest on its four hour chart, as the pair appears to be finding resistance around parity. Price spiked close to the 146.03 area and found strong resistance again and have been rejected. The downtrend is still very much valid since the price was unable to close past the 50EMA on the chart as shown. The pair has been clearly rejected by the EMA and looks for some support on the 100SMA with oscillator below 50.0 level and continues to decline.

The intraday bias remains on the downside. As seen in the chart, the pair rejection at the resistance area and the levels are holding at the area. In spite of the repeated positive attempts of the pair to break price levels, its attempt to settle above the resistance levels has been rejected at resistance. Therefore, we will keep preferring the bearish bias in the upcoming period.

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