Global macro overview for 28/09/2017:
In a speech to mark the 20th anniversary of the independence of the Bank of England, British Prime Minister Theresa May has reiterated that there are benefits from an open and innovative economy – provided it is reformed and properly regulated: "A free-market economy, operating under the right rules and regulations, is the greatest agent of collective human progress ever created." Moreover, she said: "It was the new combination which led societies out of darkness and stagnation and into the light of the modern age. It is unquestionably the best, and indeed the only sustainable means of increasing the living standards of everyone in a country." Nevertheless, the living standards in the UK have decreased as a result of average wages failing to keep pace with the price increases caused by the fall in the value of the British Pound since the Brexit vote 15 months ago. The ongoing negotiations with the European Union representatives are not going that well as Theresa May anticipated. Even Bank of England Governor Mark Carney's nominal hawkish point of view towards the interest rates and general economic outlook has been recently subdued. In his speech today, he said, that the monetary policy cannot prevent weaker real income growth that will likely to accompany Brexit as UK economic prosperity will reflect final Brexit arrangements with the EU.
In conclusion, the none of this is good news for the British Pound as the option of failed negotiations and hard-Brexit is getting more real.This situation will in result decrease the UK living standard even more and might greatly influence the exchange rate of the Pound across the board.
Let's now take a look at the GBP/JPY technical picture on the H4 time frame. The market is still consolidating the gains in the horizontal zone between the levels of 149.72 - 152.82. Any breakout below 23%FIbo would directly expose the nearest support at the level of 147.59 for a test. As long as the market stays below the dashed black trend line, the short-term outlook is bearish to sideway.
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