“¢ The British Pound witnessed some short-covering move ahead of PM May’s statement.
“¢ Improving risk-sentiment undermines JPY’s safe-haven demand and remained supportive.
The GBP/JPY cross finally broke out of its three-day-old consolidative trading range and surged to multi-day tops, around the 141.00 neighborhood during the mid-European session on Tuesday.
After an initial dip to 139.65 area – closer to four-month lows set on Friday, the cross witnessed a dramatic turnaround in what could be termed as some near-term GBP short-covering move ahead of the UK PM Theresa May’s statement.
PM May will set out a new proposal for her deal in a speech at 15:00 GMT and speculations that her offer might be compelling enough to convince the UK lawmakers to pass the Withdrawal Agreement Bill was seen as a key factor behind the move.
This coupled with improving global risk appetite, as depicted by a positive trading sentiment around equity markets, dampened the Japanese Yen’s relative safe-haven status and remained supportive of the pair’s goodish intraday bounce to multi-day tops.
It, however, remained to be seen if bulls are able to capitalize on the recovery move or the uptick is still seen as a selling opportunity amid concerns about May’s early exit and that her replacement with a pro-Brexit hardliner might lead the UK into a no-deal split.
Hence, it would be prudent to wait for a strong follow-through buying before confirming that the cross might have actually bottomed out in the near-term and positioning for any further near-term recovery towards reclaiming the 142.00 round figure mark.
Technical levels to watch