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GBP has been under severe pressure against JPY since the price rejected off 149.50 earlier this year. Besides, the pair is still expected to continue a decline

The UK economy has been going through troubled times that is proved by worse-than-expected economic reports and the strong likelihood of a no-deal Brexit. As a result, this scenario doubled the budget deficit next year. These factors are to blame for weaker GBP. Experts share the viewpoint that a no-deal Brexit would hurt confidence, deter investment, and lead to higher trade barriers with the European Union, pushing down the GBP value and causing the economy to contract by 2% by the end of 2020.

Despite the positive UK Average Earning Index report which increased to 3.4% from the previous value of 3.2%, CPI remained flat at 2.0% as expected. Claimant Count Change had a negative result of an increase to 38.0k from the previous figure of 24.5k which was expected to have positive outcome of a decrease to 18.9k. Moreover, the UK unemployment rate was unchanged at 3.8% as expected. Today Public Sector Net Borrowing report is going to be published which is expected to have better outcome with a decrease to 3.4B from the previous figure of 4.5B.

On the other hand, Bank of Japan Governor Haruhiko Kuroda recently stated that the central bank would inspect economic developments until the last minute before making a policy decision this month. He suggested that whether to stand pat or increase stimulus will be a close call. US-China trade jitters cloud the global outlook. An increasing number of market players expect the BOJ's next move to be ease monetary policy with some betting of action as early as the next rate review on July 29-30. Aside from debating monetary decisions, the BOJ will issue at the July meeting new quarterly economic and inflation projections that serve as a basis for future policy decisions. Japan's core inflation slowed to its weakest in about two years in June, data showed on Friday, underlining the nation's long battle to boost consumer prices. The global economy is facing a slowdown and the industrial production heen faltering in the face of a bruising US-China trade war. BOJ officials said they remain ready to expand stimulus, joining the US Federal Reserve in signaling an easing may be coming soon.

To sum it up, JPY is still the stronger currency in the pair while GBP is expected to extend further weakness. Though GBP recently found some support from positive economic reports, its weakness is far greater than the required gains.

TECHNICAL OVERVIEW:

The price reached 135.00 with strong bullish momentum. The price recently managed to reject off the event area which is expected to lead the price lower towards 133.50 support area in the coming days. As the price remains below 135.00 area with a daily close having a preceding strong bearish trend in place, it is expected to sink lower towards 133.50 support area.

Exchange Rates 19.07.2019 analysis

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Viele Grüße,
Analytiker: InstaForex Analyst
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