- GBP/JPY witnessed some selling on Wednesday and snapped three days of winning streak.
- Comments by EU president took its toll on the British pound and exerted some pressure.
- A softer risk tone revived demand for the safe-haven JPY and contributed to the downfall.
The GBP/JPY cross broke down of its intraday consolidative trading range and dropped to fresh daily lows, around the 139.15 region during the first half of the European session.
Having stalled its recent move up to two-week tops, the cross witnessed a modest pullback on Wednesday and for now, seems to have snapped three consecutive days of winning streak. The corrective fall was sponsored by the emergence of some fresh selling around the British pound and reviving demand for the safe-haven Japanese yen.
The European Commission president, Ursula von der Leyen raised doubts over the prospects for a Brexit deal and said that the disagreement over access to Britain’s fishing waters continues to block progress. This, in turn, took its toll on the sterling and was seen as one of the key factors exerting pressure on the GBP/JPY cross.
Apart from this, a modest pullback in the US equity futures drove some haven flows towards the Japanese yen and contributed to the downfall. The GBP/JPY cross has now erased the previous day’s modest gains, albeit lacked any strong follow-through. This warrants some caution before positioning for any further weakness.
That said, a sustained break below the 139.00 mark might prompt some technical selling and turn the GBP/JPY cross vulnerable to slide back towards the 138.35 resistance breakpoint. A subsequent decline below the 138.00 mark could expose intermediate support near the 137.60 region ahead of last week’s swing low, around the 137.20 area.
Technical levels to watch
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