GBP/JPY clings to gains near session tops, around 142.00 mark

• GBP/JPY regains positive traction on slightly better UK Construction PMI.
• Improving risk sentiment weighed on the JPY and remained supportive.
• Fears of a no-deal Brexit might continue to keep a lid on any strong gains.

The GBP/JPY cross maintained its bid tone through the mid-European session on Tuesday, with bulls now eyeing a sustained move beyond the 142.00 round-figure mark.

Following an early dip to one-month lows, the cross caught some fresh bids and recovered a part of the previous session’s negative move in reaction to better-than-expected final UK Construction PMI print for January.

The upside seems limited

This coupled with improving global risk sentiment – as depicted by a positive trading mood around equity markets – weighed on the Japanese yen’s perceived safe-haven status and remained supportive of the pair’s intraday recovery.

The cross rallied over 100 pips from sub-141.00 level, albeit renewed fears that Britain might crash out of the European Union at the end of the transition period held bulls from placing any aggressive bets and capped the upside.

It is worth recalling that the UK Prime Minister Boris Johnson on Monday set out tough terms for Brexit talks. Separately, the EU chief Brexit negotiator Michel Barnier said that the EU will be very demanding for a level playing field with the UK during the negotiations.

Hence, it will be prudent to wait for some strong follow-through buying before traders start positioning for any further near-term appreciating move.

Technical levels to watch