- UK economy contracted 0.2% QoQ and expanded 1.3% YoY rate in April-June quarter.
- Cautions mood underpins the JPY’s safe-haven status and might cap any strong gains.
- Any subsequent up-move is likely to get sold into amid persistent Brexit uncertainties.
The GBP/JPY cross spiked to fresh session tops in the last hour, with bulls looking to extend the momentum further beyond the 133.00 handle.
Having shown some resilience near the 132.30 region over the past two trading sessions, the cross managed to regain some positive traction on the first day of a new trading week and got an additional boost following the release of UK macro data.
Slightly better UK GDP provides a minor lift
The British Pound picked up some pace during the early European session on Monday after the final UK GDP report came in to show that the economy expanded at 1.3% yearly rate during the second quarter of 2019 as compared to 1.2% expected.
Meanwhile, the quarterly reading confirmed a contraction by 0.2%, as was estimated previously, though did little to attract any fresh selling or hinder the pair’s intraday positive move for the first time in the past four trading sessions.
On the other hand, the safe-haven Japanese Yen got a minor lift from the prevalent cautious mood and might now turn out to be the only factor keeping a lid on any strong follow-through up-move amid persistent Brexit-related uncertainties.
This coupled with the fact that a known BoE hawk Michael Saunders surprisingly turned dovish on Friday, any subsequent recovery runs the risk of fizzling out rather quickly and might be seen as an opportunity to initiate fresh bearish positions.
Technical levels to watch