- GBP/JPY gained some strong positive traction for the second straight session on Monday.
- The British pound got a lift from upbeat UK PMI and seemed unaffected by Brexit anxieties.
- Optimism over COVID-19 vaccines undermined the safe-haven JPY and remained supportive.
The GBP/JPY cross jumped to seven-day tops during the mid-European session, with bulls now looking eyeing a sustained move beyond the 139.00 mark.
A combination of supporting factors assisted the cross to gain strong positive traction on the first day of a new trading week and build on last week’s modest rebound from the 137.20 area. The British pound benefitted from upbeat UK PMIs and seemed rather unaffected by Brexit anxieties.
In fact, the EU’s chief Brexit negotiator Michel Barnier said that fundamental differences remain in the trade talks with the UK. It is worth reporting that negotiators have failed to reach a compromise on three sticking points – the so-called level playing field, fisheries and state-aid rules.
The GBP bulls, however, largely shrugged off comments, instead remained optimistic over the possibility of a last-minute Brexit deal. Apart from this, the upbeat market mood undermined demand for the safe-haven Japanese yen and remained supportive of the GBP/JPY pair’s strong positive move.
The global risk sentiment remained well supported by positive news about a potential vaccine for the highly contagious coronavirus disease. In the latest development, Oxford University and AstraZeneca announced that their COVID-19 vaccine was 90% effective in one of the dosing regimens.
Meanwhile, a shot created by Moderna and one made jointly by Pfizer and Germany’s BioNTech were found to be more than 90% effective in their own late-stage trials. This, in turn, boosted investors’ confidence and was evident from a goodish pickup in the global equity markets.
Market participants now look forward to the Bank of England Monetary Policy Report Hearings before Parliament’s Treasury Committee, due later this Monday. Hence, remains to be seen if the GBP/JPY cross is able to capitalize on the move or bulls opt to lighten their positions.
Technical levels to watch
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