GBP/JPY trading at 8-week low as European politics weigh on Pound

• Italy’s President Sergio Matarella appointed a former official at the International Monetary Fund, Carlo Cotarelli to form an interim government.
• North Korea is still will to meet with the US but it uncertainty remains as to whether it will happen. 

The Guppy is testing the low of 2018 established last week at 145.28. The Guppy is currently trading at around 148.58 virtually unchanged on Monday’s trading. 

The Yen has seen strong interest since last week as the summit between US President Trump and Kim Jong-un, the North Lorean leader has been canceled by Trump. In addition, the lack of progress on the US-China trade war saga also contributes to the safe-haven appeal of the Japanese currency. 

It has been reported that North Korea is still willing to meet with the US however, US stock markets are not cheering the news as the geopolitical picture remains uncertain. 

Meanwhile, Italian and Spanish headlines weigh on the GBP. In fact, Sergio Mattarella, the Italian President rejected Paolo Savona as Finance Minister. The proposition of the Five Star and League coalition has been withdrawn. In addition, Matarella just appointed a former official at the International Monetary Fund, Carlo Cotarelli to form an interim government.

 "If my government wins the confidence vote, there will be new elections at the beginning of 2019 after approving the next budget," Cottarelli said.

Ober in Spain, “opposition parties are taking advantage of Rajoy’s weakness after 29 people linked to the PP were convicted last Thursday of crimes including influence-peddling and falsifying accounts, in the culmination of a long-running corruption trial,” according to Reuters.

On the broader picture, the British Pound is weak as the odds of a rate hike from the Bank of England this year have largely shrunk in the last weeks. The worse-than-expected data combined with the dovish rhetoric from BoE officials have greatly damaged Sterling.   

GBP/JPY 4-hour chart 

The pair is trading below its 50, 100 and 200-period simple moving averages (SMA) on the 4-hour chart suggesting a strong downward bias. Supports are seen at the 145.28 swing low followed by the 144.98, March 2, swing low. To the upside, the 146.22 and 147.27 swing highs should provide resistance.