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  • Pound steady despite uncertainty around Brexit and UK politics.  
  • Yen retreats across the board as equity prices rebound.  

The GBP/JPY pair erased losses during the American session amid a weaker Japanese Yen across the board. An improvement in risk sentiment pushed the Yen to the downside, while the Pound remained unaffected by Brexit headlines.  

A steady GBP  

Concerns about how the United Kingdom (UK) will leave the European Union (EU) increased yesterday after the voting at the UK Parliament. But the slide was limited and today Pound’s performance is normal.  

Next steps in the Brexit saga, neither in UK politics are clear but so far the uncertainty affected the Pound only modestly. Reports mentioned that a new election would be the only way to break the current scenario, in the case the EU agrees to a delay until January of next years.  

Higher equity prices weight on the Yen. GBP/JPY is modestly higher for the day as it trades at 140.00, around daily highs. In Wall Street, the Dow Jones is up 0.15% while the S&P 500 gains 0.17%. US yields hold far from weekly highs but are off daily lows, adding to the negative tone around the Yen.  

Technical outlook  

The GBP/JPY holds a positive intraday tone but the momentum appears to be fading. It is testing the 140.10 area. It needs to break and hold on top to clear the way to more gains. The next resistance is seen at 140.55/60. A correction from 140.00 seems likely ahead of the Asian session. Support levels might be seen at 139.75 and 139.45.  

On a wider perspective, after the run from 130 to 140 in two weeks, the current consolidation seems expected and could continue or be followed by an extension of the correction.