- A combination of factors assisted GBP/JPY to catch some aggressive bids on Tuesday.
- The bullish momentum seemed rather unaffected by the increasing risk of hard Brexit.
- The upbeat market mood undermined the safe-haven JPY and remained supportive.
The GBP/JPY cross surged to near three-month tops in the last hour, with bulls now looking to extend the momentum further beyond the 136.00 round-figure mark.
The cross built on its recent recovery move from levels below the key 130.00 psychological mark and gained some strong follow-through traction for the fourth consecutive session on Tuesday. The bullish trajectory was led by a goodish pickup in demand for the British pound and got an additional boost from the upbeat market mood, which undermined the safe-haven Japanese yen.
The sterling remained well supported by the prevalent US dollar selling bias and seemed rather unaffected by the increasing risk of a hard Brexit. As the latest round of Brexit talks gets underway this Tuesday, the UK PM spokesman crossed the wires and reiterated that Britain will not compromise on key issues such as fisheries and the level playing field.
Meanwhile, the recent optimism about a sharp V-shaped recovery for the global economy largely negated worries over worsening US-China relations. The risk-on environment was evident from the positive trading sentiment around the equity markets, which took its toll on the Japanese yen’s perceived safe-haven status and contributed to the pair’s strong bid tone.
This coupled with possibilities of some short-term trading stops being triggered on a sustained move beyond the key 135.00 psychological mark further led to the pair’s sudden spike over the past hour or so. Hence, it will be prudent to wait for some follow-through buying to see if the momentum is backed by any genuine buying or turns out to be a stop-run.
Technical levels to watch
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