- Brexit uncertainties/dovish BoE expectations continue to weigh on the British Pound.
- Risk-on mood undermines JPY’s safe-haven demand but does little to lend any support.
- Tuesday’s UK jobs report for an eventual bearish break through the 135.00 round figure.
Having posted a session high level of 135.85, the GBP/JPY cross met with some fresh supply and has now moved within the striking distance of multi-month lows set last Thursday.
The cross continued with its struggle to make it through the 136.00 handle and remained on the defensive amid persistent Brexit-related uncertainties. This coupled with speculations that the BoE will soon join other major central banks in easing monetary policy exerted some fresh downward pressure on the British Pound and led to the pair’s weaker tone on the first day of a new trading week.
Meanwhile, the prevailing risk-on mood – supported by Monday’s mostly in line/upbeat Chinese macro data, undermined the Japanese Yen’s relative safe-haven demand and might turn out to be one of the key factors that might help limit the downside, at least for the time being.
Looking at the broader picture, the pair’s inability to register any meaningful recovery clearly suggest that the near-term bearish pressure might still be far from over. Adding to this, the recent range-bound action might still be categorized as a consolidative phase, indicating a pause before the next leg of a directional move – bearish in this case.
Hence, any attempted move beyond the 136.00 round figure mark will be seen as a selling opportunity and a follow-through weakness, even below the key 135.00 psychological mark, remains a distinct possibility, though traders are likely to wait for Tuesday’s UK monthly jobs report before initiating fresh bearish positions.
Technical levels to watch
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