- Renewed Brexit-related uncertainties exerted some fresh pressure on the Pound.
- Reviving safe-haven demand underpinned the JPY and added to the selling bias.
The GBP/JPY cross extended its steady decline through the mid-European session on Monday and is currently placed at the lower end of its daily trading range, just above mid-135.00s.
The cross failed to capitalize on last week’s late upsurge to four-month tops and met with some fresh supply on the first day of a new trading week amid renewed concerns that the UK and European leaders may not reach a deal by October 31 Brexit deadline.
Fading Brexit optimism exerts fresh pressure
Earlier this Monday Irish Foreign Minister Simon Coveney said that we are still far from a Brexit deal and reignited market worries, which eventually turned out to be one of the key factors exerting fresh downward pressure on the British Pound.
This coupled with a slight deterioration in the global risk sentiment, as depicted by a weaker trading sentiment around equity markets, underpinned the Japanese Yen’s safe-haven status and further collaborated to the pair’s heavily offered tone.
The already weaker sentiment surrounding the Sterling deteriorated further on the back of reports, which cited senior EU officials saying that they are not optimistic about chances of Boris Johnson getting a Brexit deal through parliament.
With Monday’s decline, the cross has now retreated over 220 pips from the 138.00 neighbourhood touched on Friday and seems all set to snap three consecutive days of winning streak amid absent positive Breixt-related headlines.
Hence, the market focus will remain on the EU leaders meeting on Thursday and Friday to see if a deal is possible before the fast approaching Brexit deadline on October 31, which will play a key role in determining the pair’s near-term trajectory.
Technical levels to watch
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