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   “¢   UK PM May reportedly will reject EU’s improved offer on Irish border.
   “¢   The knee-jerk downfall finds some support ahead of the 147.00 handle.
   “¢   Fading safe-haven demand further collaborates towards limiting downside.

The GBP/JPY cross reversed the post-UK CPI up-move and tumbled to the 147.00 neighborhood in the last hour, albeit quickly recovered few pips thereafter.

The pair’s sudden fall of over 130-pips in the last hour was triggered by a news report, via the Times, saying that the UK PM Theresa May will reject the improved offer by Michel Barnier for a solution on the Irish border.  

Adding to this, the UK Treasury Minister Mel Stride was noted saying that there could be another referendum if the Prime Minister’s Chequers proposals are rejected in a vote by the Commons.

The selling pressure, however, now seems to have abated, at least for the time being, with the cross recovering around 40-50 pips from daily lows and now trying to stabilize in the 147.60-70 region.  

Meanwhile, a mildly positive mood around European equity markets pointed to improving investors’ appetite for riskier assets and undermined the Japanese Yen’s safe-haven demand, which was further seen extending some support.  

Market participants now look forward to any fresh Brexit headlines coming from the informal EU summit in Salzburg on Wednesday and Thursday, which will play an important role in determining the next leg of a directional move for the British Pound.

Technical levels to watch

Renewed weakness below mid-147.00s might continue to find some support near the 147.20 region and is closely followed by the 147.00 round figure mark. On the flip side, the 148.00 handle now becomes immediate resistance, above which the cross is likely to head back towards testing 148.50-60 supply zone.