The GBP / JPY pair during the trading session on Wednesday demonstrates an upward trend. The British currency opened the day at 133.56 against the yen and recovered to 133.81 by 15:30 Moscow time. Despite local growth, the pound is still vulnerable to further decline.
According to data released today, the composite PMI in England, which reflects the dynamics of activity in the manufacturing and services sectors, fell to 55.7 in September against 59.1 in August. It is worth noting that the poll used to calculate the index for September was conducted before the UK government announced the re-imposition of antiviral restrictions, which could completely halt the recovery in the 4th quarter. Thus, the statistics for October are at risk of being worse, which will finally undermine the pace of economic recovery of the British economy. In addition, in the event of a further deterioration of the epidemiological situation in the UK, the Government will have to go for stricter restrictions, for example, introduce a two-week quarantine,
A sell-off in the British currency could reinforce the latest comments from Foreign Minister Dominic Raab that "the key worker assistance program will not be extended." Investors fear that without federal funding for employers, the rise in unemployment will be a matter of time. Premier Inn has already announced its intention to cut up to 6 thousand jobs, which is 18% of the company's total staff.
Increased demand for the Japanese yen, as a protective asset, may also be a factor in the decline of the GBP / JPY pair. US President Donald Trump, speaking at the UN on Tuesday, criticized China, accusing it of spreading the coronavirus pandemic. Earlier, Antonio Guterres, UN Secretary General, warned of the risk of a cold war between the world's two largest economies. Considering the above, the GBP / JPY pair retains the potential to decline towards 132.00.
GBP / JPY SellLimit 134.50 TP 132.00 SL 135.10
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