GBP/JPY remains flat at 134.00 after rejection from 134.70

• GBP/JPY flat around 134.00 after Thursday’s reversal from 134.70.
• Brexit uncertainty and UK’s downbeat economic outlook are weighing on GBP.
• Support at 133.70 keeps the near-term positive tone.

The pound has remained trading sideways around 134.00 on Monday, with bearish attempts contained at 133.70 after Thursday’s reversal from two-week highs at 134.70.

Brexit uncertainty remains weighing on the pound

The sterling has been consolidating gains on a quiet session, with US markets shut for the Independence Day bank holiday. The pair has appreciated about 1.8% after two consecutive weeks in positive yet with Brexit fears keeping GBP upside attempts in check.

Market speculation about a certain softening of the positions between the two parties has triggered some hopes about the possibility of a breakthrough in the coming weeks, which has eased fears of a no-deal exit from the Union and has given some respite to the GBP.

Beyond that, the moderate risk aversion, with the increase of coronavirus cases back to the forefront combined with the overall Brexit uncertainty and the weak UK economic outlook, which has generated speculation of BoE negative interest rates in 2021, are tapering demand for the pound.

GBP/JPY: Important support at 133.70

From a technical point of view, the pair maintains the near-term positive tone while above 133.70 (Jul. 2 low, intra-day low), with next support levels at 132.95 (Jul. 1 low) and 131.95 (Jun.29 low). On the upside, immediate resistance lies at 134.20 intra-day level, and above there, 134.70 (Jul. 2 high) and 136.30 (Jun. 15 high).

GBP/JPY key levels to watch