- Rejection of the Brexit proposals in the UK parliament dismantled previous strength of the pair that challenged three-week-old resistance.
- Investors now await further developments on the Brexit, coupled with the British construction PMI, to determine near-term trade sentiment.
GBP/JPY remains little weak around 145.60 on early Tuesday. The quote recently witnessed pullback from three-week-old trend-line resistance as the UK parliament again rejected Brexit proposals that might have directed the British departure from the EU. Risk events like Brexit and the US-China trade negotiations could continue directing near-term pair moves whereas the UK construction PMI might entertain short-term traders.
With the UK’s House of Commons announcing rejection to all the four Brexit proposals during today’s indicative vote, the British Pound (GBP) dropped across the board as investors fear political disarray to weigh on the nation’s departure.
The US 10-year Treasury yields also witnessed pullback to 2.48% from earlier high around 2.50%.
The GBP/JPY pair rose to a week’s high on Monday as renewed market optimism, backed by an upbeat news report from the US-China trade talks and welcome China data, joined expectations that the UK members of parliament (MPs) would deliver a meaningful solution to the Brexit uncertainty.
Having witnessed another disappointment from the British lawmakers, speculations grew that the PM Theresa May’s Brexit proposal will again be voted on the parliament in order to avoid no-deal Brexit on April 12. Else, speculations were also on the rise for another Brexit referendum as politicians jostle to solve the problem at hand. Though, nothing of them is sure to take place unless we hear more from the UK authorities.
Meanwhile, Markit Construction purchasing managers’ index (PMI) for the UK is the only data on hand to watch. The sentiment gauge could increase to 49.8 from 49.2. It should also be noted that a figure beneath 50 indicates a contraction in the overall industrial activity and vice versa.
GBP/JPY Technical Analysis
Considering the GBP/JPY pair’s inability to surpass three-week-old descending resistance-line stretched since March 14, the chances of its pullback to 200-day simple moving average (SMA) figure of 144.70 can’t be denied. During the pair’s extended downturn beneath 144.70, 100-day SMA level of 143.55 should gain sellers’ attention.
Meanwhile, an upside clearance of 146.20 resistance-line figure could propel the quote to 146.50 and 147.30 whereas 148.40 and 148.85/90 could challenge bulls then after.
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