• GBP/JPY fails to hold on to recovery gains amid fresh risk-off.
• Trade/political headlines question market’s recent risk sentiment.
• The UK’s House of Commons will sit today at 11:30 GMT after the British Supreme Court termed PM’s Parliament prorogation as unlawful.

Given the recent shift in the market’s risk sentiment questioning the overall strength of the British Pound (GBP), the GBP/JPY pair pulls back to 133.73 during Wednesday’s Asian session.

The pair refrains from further advances as initial risk aversion triggered through the US President Donald Trump’s comments at the United Nations General Assembly (UNGA) got an additional boost after the US House Speaker Nancy Pelosi opened a formal Trump impeachment inquiry concerning the Republican leaders’ anticipated inclusion in Ukrainian politics.

Further worsening the risk-tone is China’s Beige Book showing the lowest economic growth, mainly due to the manufacturing contraction, coupled with mixed comments from  Chinese diplomat Wang Yi.

The quote surged to the weekly top after the United Kingdom’s (UK) Supreme Court found that the Prime Minister (PM) Boris Johnson’s prorogation of the Parliament was unlawful. Following the result, the GBP rose across the board as lawmakers’ intervention to the Brexit proceedings could stop the PM Johnson form a no-deal departure. Also adding to the upside was upbeat US-China trade sentiment during the early Tuesday headlines from the US.

It should also be noted that recently released minutes of the Bank of Japan’s (BOJ) July month monetary policy meeting kept emphasizing the Japanese central bank’s “wait and see” approach while noting downside risk to the economic activity and prices.

Investors will now keep an eye over the trade/political headlines for near-term direction amid a lack of data/events up for publishing on the economic calendar.

Technical Analysis

Not only 100-day simple moving average (SMA) level of 134.53 but the monthly top, at 135.75, could also question bulls targeting July high of 137.80 and 200-day SMA level of 139.15. Alternatively, pair’s downside break of 133.00 highlights 50-day SMA level near 131.50 as short-term key support.