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Haven demand and growing UK struggles likely to drive GBP/JPY weakness


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Haven demand and growing UK struggles likely to drive GBP/JPY weakness

GBP/JPY looks likely to fall further, with the construction PMI highlighting the growing hurdles faced by the UK economy.

bg_pound%20GBP%20sterling%2003.JPGSource: Bloomberg
 Joshua Mahony | Senior Market Analyst, London | Publication date: Wednesday 06 October 2021 

Construction PMI highlights growing economic struggles

The UK is facing a growing economic crisis as energy prices surge and supply-chain friction make business increasingly difficult.

That was evident in today’s construction Purchasing Manager's Index (PMI) reading, with the survey seeing costs rise, supply shortages worsen, and output growth slow for a third consecutive month. The situation is clearly taking a turn for the worse, and businesses are likely to bear the brunt of it.

On a wider scale, the UK is faced with a particularly bad time to be cast adrift of mainland Europe from a regulatory perspective, with Brexit bringing additional friction when seeking to bring supplies into the country.

That provides a warning sign that we could see the economic recovery derail somewhat, raising demand for havens over the pound.

 

Construction_PMI_ACTIVITY.PNG.pngSource: IHS Markit; CIPS

GBP/JPY looks set for another turn lower

GBP/JPY has been on the back foot today, with the pair turning lower in what looks like a continuation of the four-month downtrend seen since May.

Looking at the daily chart, we can see how trendline resistance has once again come into play here. A break up through 152.57 would bring about a more positive outlook, yet the bulls are expected to remain in charge until such a break occurs.

 

GBPJPY-Daily61021.pngSource: ProRealTime
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15 hours ago, neonred said:

Well done Josh Mahony , saw you on Yahoo finance today . I managed to get caught out on that Gas pull back.  have to say wasn't expecting that. Nice interview

ATB

Hi @neonred

Thanks, I will pass on the remarks to Joshua Mahony. We wish you well for the future.

 

All the best - MongiIG

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