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  • Prospects for an imminent Brexit deal provided a strong boost to the GBP/JPY on Thursday.
  • The underlying bullish sentiment undermined the safe-haven JPY and remained supportive.

The GBP/JPY cross continued scaling higher through the first half of the European trading action and rallied further beyond the 141.00 mark to hit near four-month tops in the last hour.

A combination of supporting factors assisted the cross to build on the overnight positive move and gain some strong follow-through traction for the second consecutive session on Thursday. With the latest leg up, the GBP/JPY cross has now rallied over 400 pips from sub-137.00 levels touched on the first day of the current week.

Growing market expectations for an imminent Brexit deal was seen as one of the key factors that provided a strong lift to the British pound. On the other hand, the underlying bullish sentiment in the equity markets undermined the safe-haven Japanese yen. This, in turn, pushed the GBP/JPY cross to the highest level since early September.

Apart from this, possibilities of some short-term trading stops being triggered on a sustained move beyond the 140.40-50 heavy supply zone further contributed to the strong momentum. A subsequent buying above the previous monthly swing highs, around the 140.70 region, might have already set the stage for additional gains for the GBP/JPY cross.

That said, oscillators on hourly charts are already flashing overbought conditions and warrant some caution for aggressive bullish traders. Investors might also wait for an official confirmation before positioning for any further appreciating move. Hence, the key focus will remain on a joint press conference, expected within hours.

Technical levels to watch