Not a lot of top-tier reports scheduled during the London session, but a U.K. release could inspire a breakout on GBP/JPY’s triangle pattern.
Fresh Market Headlines & Economic Data:
- AIG: services sector improves in October
- U.K. consumers keep lid on spending in October
- China Services Growth Slows to 8-Month Low
- RBA holds rates steady, focus remains on jobs market
- China Reviews Xi’s Options to Visit U.S. to Sign Trade Deal
Upcoming Potential Catalysts on the Forex Calendar:
- U.K.’s services PMI at 9:30 am GMT
- Euro Zone’s PPI at 10:00 am GMT
- Canada’s trade balance at 1:30 pm GMT
- U.S. ISM non-manufacturing PMI at 3:00 pm GMT
- New Zealand’s quarterly labor market numbers at 9:45 pm GMT
What to Watch: GBP/JPY
Without a lot of top-tier news scheduled over the next couple of hours, focus will likely turn to continued optimism over a U.S.-China trade deal.
The U.K.’s services PMI due in a bit could serve as potential catalyst. Analysts see the report at 49.6 in October, which is slightly better than its 49.5 September reading. If we do see a better-than-expected release, then bulls could add the good news on top of their optimism over seeing a U.S.-China trade deal signed as early as this month.
GBP/JPY is currently locked in a symmetrical triangle after gaining more than a thousand pips since early October.
An upside breakout brought by a bullish catalyst could push the pound 300 pips higher (the height of the triangle), or even to its previous resistance levels near 143.00 and 144.00. A significant PMI data miss, on the other hand, could drag Guppy to the 136.00 or 138.00 previous areas of interest.
Given that GBP/JPY moves an average of 20 – 25 pips per hour in the next couple of hours, a 100-pip stop is a good place to start if you’re planning on trading this setup.