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The U.K. has a data dump on tap including its Q3 preliminary GDP read.

Will GBP/JPY’s reaction provide trading opportunities today?

Before I show you a setup that I’m looking at, check out the top headlines that Asian session traders had priced in:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • U.K. preliminary GDP at 7:00 am GMT
  • U.K. industrial production at 7:00 am GMT
  • BOE Governor Bailey to make a speech at 8:00 am GMT
  • Eurozone industrial production at 10:00 am GMT
  • U.S. CPI at 1:30 pm GMT

What to Watch: GBP/JPY

GBP/JPY 4-hour Forex Chart
GBP/JPY 4-hour Forex Chart

In a few hours, the U.K. will print its preliminary GDP reading for Q3 2020. Oh, and we’ll also see manufacturing, industrial, and trade numbers!

Word around is that the economy has recovered by 15.5% after dropping by 19.8% in Q2. A strong reading isn’t likely to support the pound, though, especially since the numbers don’t reflect the latest lockdown measures in Britain.

Unless we see much stronger-than-expected data releases from the U.K., then the pound will likely see some retracement against the yen. The 137.50 handle is a good level to watch out for as it lines up with a 50% Fib retracement and a previous resistance on the 4-hour time frame.

If traders maintain their risk-on vibes in the next trading sessions, however, or if they feel bullish over the new Brexit task force, then GBP/JPY could find support around the 138.75 levels and make new weekly highs.

Keep in mind that GBP/JPY tends to move by 100 pips or so on Thursdays. Make sure to factor that in when you place your entry and exit targets!