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  • The upbeat market mood undermined the safe-haven JPY and assisted GBP/JPY to gain traction.
  • Persistent Brexit-related uncertainties held bulls from placing aggressive bets and capped gains.

The GBP/JPY cross maintained its bid tone, comfortably above the 136.00 mark through the first half of the European session, albeit has retreated few pips from daily tops.

The cross managed to regain some positive traction on the first day of a new trading week and shot to a three-day high level of 136.61 during the early European session. The uptick was supported by the prevalent upbeat market mood, which tends to undermine the safe-haven Japanse yen.

The Democratic candidate Joe Biden’s victory in a nail-biting US Presidential election eliminated some of the uncertainties and boosted investors’ confidence. Adding to this, upbeat Chinese trade balance data released over the weekend remained supportive of the risk-on environment.

However, persistent Brexit-related uncertainties held bulls from placing any aggressive bets and kept a lid on any further gains for the GBP/JPY cross. The intraday positive move started losing the steam following not so optimistic remarks by Irish foreign minister, Simon Coveney.

Coveney said that this week is the “endgame” of Brexit talks and added that level playing field, fisheries are still outstanding issues. Amid significant differences on key sticking points, Brexit negotiations are set to resume in London on Monday as both sides try to reach an agreement.

Meanwhile, the GBP/JPY cross remained well within a four-day-old trading range and the downside is more likely to be cushioned by the offered tone surrounding the safe-haven JPY. Investors might also wait for an official statement on Brexit before placing any aggressive bets.

In the meantime, a scheduled speech by the Bank of England Governor Andrew Bailey and chief economist Andy Haldane might influence the British pound. This, along with the broader market risk sentiment should provide some impetus and assist traders to grab some short-term opportunities.

Technical levels to watch