Sterling is on the move and that’s not likely to stop with the latest U.K. inflation data coming around the corner. Will this bring GBP/JPY to retest a major support area and draw the bulls in once again?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a potential range break on USD/CHF, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
Equity Markets Bond Yields Commodities & Crypto
DAX: 15722.99 +0.14%
FTSE: 7034.06 -0.49%
S&P 500: 4443.13 -0.57%
NASDAQ: 15037.76 -0.45% US 10-YR: 1.277% -0.047
Bund 10-YR: -0.344% –0.004
UK 10-YR: 0.739% 0.00
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Gold: 1,807.10 +0.71%
Bitcoin: $46,568.25 +4.04%
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Fresh Market Headlines & Economic Data:
Dow sheds 290 points, S&P 500 closes lower despite cooler-than-expected inflation reading
U.S. consumer prices slow further in August; inflation likely peaked
America is short more than 5 million homes, and builders can’t make up the difference
Global debt is fast approaching record $300 trillion – IIF
Brexit won’t turn UK financial sector into a “Wild West”, says minister
Britain delays Brexit border checks as food industry warns of permanent shortages
Gold climbs as U.S. inflation miss clouds Fed taper bets
Oil turns negative on weak inflation data, improving storm outlook
Major European Bank said to be building crypto custody arm
Solana validators ready ‘potential restart; amid blockchain outage
Sell the news? ADA price drops 10% following Cardano’s long-awaited smart contracts rollout
Upcoming Potential Catalysts on the Economic Calendar
New Zealand Current Account at 10:45 pm GMT
Japan Tankan Index at 11:00 pm GMT
Japan Machinery Orders at 11:50 pm GMT
Australia New Home Sales at 12:00 am GMT (Sept. 15)
Australia Consumer Confidence at 12:30 am GMT (Sept. 15)
China House Price Index at 1:30 am GMT (Sept. 15)
China Retail Sales, Unemployment Rate, Trade Balance at 2:00 am GMT (Sept. 15)
U.K. Inflation Rate at 6:00 am GMT (Sept. 15)
France Inflation Rate at 6:45 am GMT (Sept. 15)
Italy Inflation Rate at 8:00 am GMT (Sept. 15)
Euro area Industrial Production, Wage Growth at 9:00 am GMT (Sept. 15)
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: GBP/JPY
The British pound is taking a beatdown against the safe haven major currencies today, correlating with headlines from the U.K. It looks like Brexit has come back into focus after the British government delayed the introduction of checks on goods imported from the European Union once again. This has raised fears of the potential damage to the U.K.’s retail sector, as well as the food supply, so it’s understandable where the sell-off in Sterling may be stemming from.
The rise in volatility may continue to hold, or even accelerate later in the London session as we get the latest inflation read from the U.K. Expectations are that this inflation read is going to be a hot one with analysts seeing headline CPI jump from 2.0% to 2.9% in August, well above the Bank of England’s inflation target.
If that scenario plays out, the odds rise of the BOE potentially seeing inflation as non-transitory, and the need for rate hikes. This could lift the British pound in the short-term, but since this is somewhat anticipated, we may see a little bit more GBP weakness before the buyers jump in.
That brings us to GBP/JPY, which is not too far from a major support area around the 151.50 minor psychological handle. If the market does retest there, we’ll be on the look out for bullish reversal candles if U.K. inflation is hot, but of course, if the number comes in below expectations, the bias potentially shifts in favor of the bears. Fresh shorts to play a weaker-than-expected inflation number could pop up and pile onto Brexit fears if the market sustains a break below the 151.50 support area.
