“¢ Hunt’s comments on no-deal Brexit prompts some fresh selling.
“¢ Risk-recovery/fading safe-haven demand helps limit further downside.
The GBP/JPY cross extended the post-UK jobs data retracement slide and has now erased a major part of its early gains to mid-142.00s.
The cross a minor lift after the latest UK labour market report showed that the unemployment rate unexpectedly dropped to 4.0% during the past 3 months to July. The uptick was quickly sold into on the back of softer than expected average weekly earnings including bonuses and a larger than anticipated rise in the number of people claiming jobless benefits.
The latest leg of downtick over the past couple of hours could further be attributed to the latest Brexit headlines, where in the UK foreign secretary Jeremy Hunt was noted saying that risk of a no-deal Brexit has been increasing and there is absolutely no guarantee that we will get a deal.
Meanwhile, fading safe-haven demand, amid slight improvement in investors’ appetite for riskier assets, continued weighing on the Japanese Yen and could be the only factor that could help limit further downside, at least for the time being.
Technical levels to watch
Any subsequent fall is likely to find support near the 141.10-141.00 region, below which the cross seems more likely to retest 140.70 intermediate support before eventually dropping to the key 140.00 psychological mark.
On the flip side, the 142.00 handle now becomes immediate hurdle and is followed by resistance near mid-142.00s, which if cleared might trigger a near-term short-covering bounce and lift the cross beyond the 143.00 mark.
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