GBP: BoE; Brexit Talks To Continue Into Next Week

GBPUSD

The Pound is currently trading at 1.3052, 14 pips above where it opened at on Wednesday. The Dollar's sell-off ahead of Fed's decision helped the GBP/USD pair reach a fresh high at 1.3101 once the announcement was out, with the Pound founding additional support in a better-than-expected UK Markit Manufacturing PMI, which printed 53.1 in April.

UK Money data, however, disappointed, as M4 Money Supply decreased by 0.5% MoM in March, while Mortgage Approvals in the same month resulted in 62.341K, worse than the 64.850K expected. In the Brexit front, Labour party's spokesman said that they had seen clear evidence that the government was willing to explore shifts in its position on Brexit, also announcing Brexit talks will continue next week.

The Bank of England is the next first-tier event, scheduled to meet early Thursday. The central bank is expected to leave its monetary policy unchanged, given the persistent Brexit uncertainty, although fresh economic forecasts will be released within the event. Pound's direction will depend on these last, and whether policymakers continue to believe on an upcoming rate hike.

GBPUSD 4 Hour Chart

GBPUSD 4 Hour Chart

In the 4 hours chart, the 200 EMA(Red Line) acts as a critical dynamic support for the cable pair. A break below the level would surely support additional declines ahead, despite the 20 SMA maintains its bullish slope at around 1.3000.

USDJPY

The Japanese Yen weakened on Wednesday, closing at 111.44(-5 pips) against the greenback. The Japanese Yen heads into 2019’s second quarter pushed by a rare tailwind. It spent much of the first under pressure. Global risk appetite held up rather well in the face of numerous challenges, from weakening economic data in many regions to the protracted divorce proceedings between the United Kingdom and the European Union.

The Japanese currency on Wednesday initially remained remained strong ahead of the Fed's policy update, helped by easing Treasury yields, which fell following the poor outcome of the US ISM Manufacturing PMI. The USD/JPY pair neared 111.00 as the yield on the benchmark 10-year Treasury note hit at 2.47%, its lowest since April 11, and as Wall Street fell, following Fed's decision to cut the IOER.

The pair, however, bounced from such low to settle around 111.40, as Powell's confidence revived dollar longs. Japan's macroeconomic calendar has been empty early Wednesday and will remain so this Thursday.

USDJPY 4 Hour Chart

USDJPY 4 Hour Chart

The 4 hours chart for the pair shows that it's unable to firmly regain ground above a bearish 20 SMA, while technical indicators have bounced from their intraday lows, but hold within negative levels. The pair would need to clear the 111.70 resistance to be able to extend it gains, quite unlikely ahead of the US Nonfarm Payrolls report next.

Major Economic Events happening this week (AEST Time Zone)

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