“¢ UK political/Brexit uncertainties continue to weigh on the British Pound.
“¢ The JPY benefits from reviving safe-haven demand and adds to the pressure.
“¢ Traders now seemed reluctant to place bearish bets amid oversold conditions.
The GBP/JPY cross quickly reversed an early dip to sub-138.00 level, or fresh multi-month lows, albeit struggled to extend the intraday bounce and remained in the negative territory.
The recent UK political uncertainty, coupled with growing concerns about a no-deal Brexit – amid speculations that a pro-Brexit hardliner might replace the outgoing PM Theresa May, turned out to be one of the key factors that kept exerting some downward pressure on the British Pound.
The cross extended its recent bearish trajectory and was further pressurized by a pickup in the Japanese Yen’s safe-haven demand, which benefitted from a fresh round of selloff in equity markets and lingering fears of a further escalation in the US-China trade tensions.
The downside, however, remained cushioned in absence of any UK political/negative Brexit headlines and absent relevant market moving economic releases. Moreover, investors now seemed to refrain from placing fresh bearish bets amid highly oversold conditions on short-term charts.
Hence, it would be prudent to wait for a modest rebound or some near-term consolidation before traders again start positioning for a fresh leg of depreciating move in the near-term.
Technical levels to watch
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