“¢ Barnier’s comments revive hard-Brexit fears and prompt some aggressive selling.
“¢ Investors remain sceptic over May’s ability to get the Brexit deal past parliament.
The GBP/JPY cross met with some aggressive supply in the last hour and tumbled back closer to the lower end of its weekly trading range.
The lack of negative Brexit headlines over the past couple of days prompted some short-covering around the British Pound on Wednesday, helping the cross to register its highest daily close in two weeks. The uptick, however, lacked any follow-through, with a strong bid tone around the Japanese Yen exerting some fresh downward pressure through the early European trading session on Thursday.
The Japanese Yen caught some aggressive bids following the release of stronger than expected monthly retail sales data. Bearish traders even seemed to shrug off the prevalent risk-on mood, supported by the Fed Chair Jerome Powell’s dovish comments and which tends to dent the Japanese Yen’s safe-haven demand.
Meanwhile, the latest leg of sharp fall over the past hour or so could further be attributed to the EU chief Brexit negotiator Michel Barnier’s comments, saying that negotiations on Brexit are over and this is the only possible Brexit deal.
Adding to this, investors remained sceptic over the UK PM Theresa May’s ability to get the Brexit deal past parliament and a failure could trigger a leadership challenge, which was also seen as one of the key factors that kept a lid on any runaway rally for the British Pound.
The cross has now slipped back below the key 145.00 psychological mark and in absence of any major market moving economic releases, the cross remains at the mercy of incoming Brexit-related headlines.
Technical levels to watch
A subsequent fall below the 144.80 horizontal zone is likely to accelerate the slide further towards 144.35 intermediate support en-route the 144.00 round figure mark. On the flip side, the 145.10-15 region now seems to act as an immediate resistance, above which the up-move could further get extended back towards the 145.50-60 heavy supply zone.
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