- Sterling consolidates gains after Boris Johnson becomes UK PM.
- GBP/JPY recovers further from monthly low, having the best day in four weeks.
The GBP/JPY pair is consolidating important daily gains as it extends the recovery after hitting last week the lowest level since January. During the European session, it peaked at 135.27, the highest since July 15.
From the top pulled back finding support slightly above 134.80 and climbed back above 135.00. As of writing, trades at 135.10, up 50 pips for the day. For the bullish tone to remain intact, GBP/JPY needs to hold on top of 134.50, while on the upside the critical level is seen around 135.40, a horizontal level and the 20-day moving average.
Boosted by the pound
The key driver behind today’s rally in GBP/JPY has been the pound that rose across the board. In the UK, Boris Johnson became the Prime Minister. Attention is focused now on his cabinet appointments. In his statement shortly after accepting to form the government mentioned the UK will leave the European Union on October 31, “no ifs or buts“. He offered no major surprises and the pound held to its gains.
Still, despite moving with an upside bias over the last week, GBP/JPY trades in negative territory for the month and within a medium-term downtrend.
Regarding the yen, it is mostly higher today as equity prices in Europe finished mostly lower, amid mixed results in Wall Street and on the back of lower US yields.
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