- GBP/JPY failed to capitalize on last week’s goodish positive move to three-week tops.
- Comments by the UK PM spokesman resurfaced concerns over a no-deal Brexit.
The GBP/JPY cross finally broke down of its early consolidative trading range and dropped to sub-143.00 levels or fresh session lows in the last hour.
The cross failed to capitalize on last week’s strong positive move of around 225 pips and witnessed a modest pullback on the first day of a new trading week. As investors looked past the latest optimism over Rishi Sunak’s appointment as the new Chancellor of the Exchequer, not so optimistic comments by the UK Prime Minister Boris Johnson’s spokesman prompted some long-unwinding trade on Monday.
GBP weighed down by no-deal Brexit concerns
Johnson’s spokesman said that Britain does not need any special arrangements in its future relationship with the European Union and added that it wants a trade agreement similar to other deals the EU has struck. The comments resurfaced fears of hard-Brexit and exerted some pressure on the British pound.
The downside, however, remained cushioned amid an offered tone surrounding the safe-haven Japanese yen. The latest monetary stimulus measures announced by the People’s Bank of China helped lift the global risk sentiment and eventually undermined demand for perceived safe-haven currencies.
Hence, it will be prudent to wait for some strong follow-through selling before confirming that the recent corrective bounce might have already run out of the steam and positioning for any further near-term depreciating move amid absent relevant market moving economic releases.
Moving ahead, this week’s other important UK macro data – the monthly employment details and the latest consumer inflation figures on Tuesday and Wednesday, respectively – will influence the GBP price dynamics and provide a fresh directional impetus.
Technical levels to watch
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