Chart of the day: GBP/JPY longs on Brexit custom unions 'backstop' in place

Technical Analysis

Author: Giles Coghlan | gbpjpy

GBP/JPY long

Last night, reported via the UK press and here by Eamonn,  Britain stated that it was prepared to remain in the customs union beyond 2021. This is a 'back stop' scenario which ensures that there will be no 'hard border' with Northern Ireland. It is a significant step towards stability for the UK in reaching a deal. It will change the tone of the present customs negotiations as the backstop is now in place, the worst case, forced hard border scenario, will now be avoided. This will be GBP positive. So, we are looking to buy the GBP.

The JPY has recently had it's Q1 GDP data which was soft. On Friday , it's national Core CPI is released, which is expected to be 0.8% vs a previous 0.9%. So, we have our pair. GBP/JPY long. Looking at the chart below we see a simple ABCD pattern emerging. 

 Risks to the trade will be any JPY strength on a safe haven play. I am a buyer from 148.30 with a 130 point stop. If you need to put in a price alert, follow this link for a reliable, free price alert.

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