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  • The GBP bulls seemed unimpressed by increasing odds of a majority for Conservatives.
  • Reviving safe-haven demand for the JPY further led to some follow-through weakness.
  • Bears are likely to wait for a sustained break below the 139.50 strong horizontal support.

The GBP/JPY cross held on to its offered tone through the mid-European session on Wednesday, albeit has managed to rebound around 30 pips from daily lows.
 
A combination of negative forces exerted some follow-through selling for the second consecutive session on Wednesday and dragged the cross farther from five-month tops, levels just above mid-141.00s set at the beginning of this week.

Trade uncertainty adds to the selling bias

Despite the fact that the incoming election polls have been indicating a majority for the UK Prime Minister Boris Johnson’s Conservative Party, the British pound seemed struggling to attract any meaningful buying interest.
 
This coupled with reviving demand for the safe-haven Japanese yen, supported by the global risk-aversion trade amid persistent US-China uncertainty, further collaborated to some follow-through long-unwinding trade on Wednesday.
 
In the latest developments, the US President Donald Trump on Tuesday threatened to raise new tariffs on Chinese imports if the ongoing trade negotiation fails while the US Senate passed a bill in support of Hong Kong.
 
This was seen fueling tension between the world’s two largest economies and weighed on the market sentiment, which was evident from a weaker tone around equities and provided a goodish lift to traditional safe-haven currencies.
 
Despite the pullback, the cross has managed to hold above mid-139.00s and in absence of any major market-moving economic releases, remains at the mercy of any incoming UK political headlines/broader market risk sentiment.

Technical levels to watch