GBP/JPY continues scaling higher, inching closer to yearly tops

Haresh Menghani FXStreet

After Monday’s brief pause, the GBP/JPY cross regained traction and continued scaling higher to hit fresh multi-month highs near the 144.70-75 region.

The prevalent risk-on environment, as depicted by positive trading sentiment around European equity markets, which tends to dent the Japanese Yen's safe-haven demand, remained supportive of the strong bid tone surrounding the cross.

Adding to this, today's better-than-expected UK manufacturing PMI, coming-in at 57.3 for April as compared to previous month's 54.2 and 54.0 expected, provided an additional boost to the pair's ongoing bullish trajectory closer to yearly tops touched in Jan.

GMT	Event	Vol.	Actual	Consensus	Previous
Tuesday, May 02
08:30	GBP Markit Manufacturing PMI		57.3	54.0	54.2

GBP outlook still looks constructive – TDS

However, renewed worries of a possible 'hard Brexit' scenario, after the EU leaders endorsed stiff divorce terms for Britain at a Brussels summit on Saturday, might contribute towards capping the cross in the near-term.

Technical levels to watch

A follow through buying interest has the potential to continue boosting the cross further beyond the key 145.00 psychological mark towards testing its next resistance near 145.75 level. On the flip side, any profit taking move now seems to find immediate support near the 144.00 handle, below which the cross is likely to accelerate the slide towards 143.35-30 intermediate support en-route 143.00 round figure mark.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.