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We’re checking out a simple consolidation setup on GBP/JPY ahead of economic updates from both the U.K. and Japan.

Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at USD/CAD ahead of Canadian economic data, 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: 15,280.86 +0.16%
FTSE: 7,109.95 +0.94%
S&P 500: 4,655.23 +1.32%
NASDAQ: 15,782.83 +1.88%
US 10-YR: 1.514% +0.029
Bund 10-YR: -0.313% +0.01
UK 10-YR: 0.866% +0.008
JPN 10-YR: 0.072% +0.008
Oil: 69.62 +2.17%
Gold: 1,785.20 -0.17%
Bitcoin: $58,109 +5.71%
Ether: $4,420.00 +6.74%
Solana: $206.84 +3.84%

Fresh Market Headlines and Economic Data:

U.S. President Biden does not expect additional lockdowns or travel restrictions as Omicron variant spreads

U.S. Pending home sales rose 7.5% m/m in October

Texas manufacturing activity in November: +9 to 27.4

German inflation surges to 6% as ECB insists spike will pass

Spain inflation rises to 5.6% y/y, highest rate since 1992

Upcoming Potential Catalysts on the Economic Calendar

Japan Unemployment Rate at 11:30 pm GMT
Japan Industrial Production at 11:50 pm GMT
New Zealand Business Confidence at 12:00 am GMT (Nov. 30)
Australia Building Permits, Current Account at 12:30 am GMT (Nov. 30)
U.K. Manufacturing PMI at 1:00 am GMT (Nov. 30)
RBA Debelle speech at 2:00 am GMT (Nov. 30)
Japan Housing Starts at 5:00 am GMT (Nov. 30)
France GDP, Inflation at 7:45 am GMT (Nov. 30)
Spain Retail Sales at 8:00 am GMT (Nov. 30)
Italy GDP 9:00 am GMT (Nov. 30)
Euro Area Inflation Rate at 10:00 am GMT (Nov. 30)
Bundesbank Weidmann speech at 10:15 am GMT (Nov. 30)

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

GBP/JPY 1-Hour Forex Chart
GBP/JPY 1-Hour Forex Chart

On the one hour chart above of GBP/JPY, we can see it was not immune to last week’s broad market risk aversion moves to the Omicron variant news. After trading sideways for a few sessions, GBP/JPY quickly dropped from the 153.00 – 154.00 range to current levels around the 151.00 handle.

Today’s session was still volatile, but it looks like the action centered around the 151.50 minor psychological level, creating a symmetrical triangle pattern. Given that this pattern is in a fresh move lower, the technical setup to keep an eye out for is a strong break below the triangle. This scenario could draw in technical sellers and take the pair lower with a strong enough catalyst.

Fortunately, we do have quite a few economic updates ahead from Japan (employment data) and the U.K. (business survey data), which can be market movers with a big enough surprise. If we do see both weaker-than-expected U.K. data and better-than-expected Japanese employment data, then the technical scenario above may play out.

Also, if we see any negative developments with the Omicron variant story, that could also be a driver for the pair as broad risk aversion sentiment would likely drive traders to the Japanese yen vs. the British pound.

Of course, we also have to be open to the possibility of an upside triangle break. If this happens on very bullish U.K. PMI data and weak Japanese employment data, then we could see a one half to full daily ATR move (around 120 pips) to the upside, depending on how big a surprise we may see.

If so, a retest of  the 152.50 – 153.00 area is likely to draw in possible sellers, those looking to short the longer-term downtrend at better prices and/or those who bought on the break and look to take short-term profits.