- The latest Brexit-related comments exert some fresh pressure on the GBP.
- Risk-on mood dents JPY’s safe-haven status and helped limit the downside.
- The focus remains on Johnson’s Brexit-related meeting with Merkel and Macron.
The GBP/JPY cross lacked any firm directional bias and seesawed between tepid gains/minor losses through the mid-European session on Monday.
The cross struggled to build on last week’s attempted bounce from multi-year lows, with a combination of diverging forces failing to provide any meaningful impetus and leading to a subdued/range-bound price action – around the 129.00 handle – on the first day of a new trading week.
Brexit uncertainties weigh on the GBP
Comments by the European Commission spokeswoman, saying that we are prepared for all eventualities in case of a no-deal Brexit, exerted some fresh downward pressure on the British Pound and kept a lid on any meaningful up-move for the cross.
This was followed by the UK PM Boris Johnson’s remarks, reiterating to come out of the EU on 31 October – with or without a deal – and further dented the already weaker sentiment surrounding the Sterling, though the prevalent risk-on mood helped limit the downside.
The fact that the US government announced recently that they will be delaying the ban on Huawei to buy supplies from US companies for 90 days boosted investors’ appetite for perceived riskier assets – like equities – and weighed on the Japanese Yen’s safe-haven status.
Apart from this, bearish traders also seemed to refrain from placing any aggressive bets ahead of Johnson’s scheduled meeting with German Chancellor Angela Merkel on Wednesday and French President Emmanuel Macron on Thursday.
Hence, it will be prudent to wait for a sustained move in either direction before positioning for any meaningful momentum amid absent relevant market-moving economic releases on Monday.
Technical levels to watch
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