GBP/JPY: Finely balanced around ¥149.00 amid hopes for a soft Breixt, sliding US yields

The GBP/JPY is trading around the ¥149.00 level, balanced on the day that did feature some volatility beforehand. The cross traded between a low of ¥148.64 and a high of ¥149.51. The pair had already traded on higher ground early in the week.

The British Pound ticked higher on hopes for a softer Brexit. The cabinet meeting that focused on the future trading relationship with the EU stated that it wants the trade to be as frictionless as possible. The lean towards free trade has provided support to the pound even if it falls short of participating in the Single Market and the Customs Union. 

The Japanese Yen is tracking US bond yields. The drop of the benchmark 10-year bond yield below 2.90% weighed on the USD/JPY. The yield broke to new 4-year highs earlier in the week. The USD/JPY closely tracks the benchmark bonds. The selling pressure in the USD/JPY was also felt in the GBP/JPY cross. All in all, the picture is balanced.

The Monetary Policy Report by the Federal Reserve painted an optimistic picture but stressed that rate hikes will be gradual, thus not providing any news. 

Earlier in Japan, inflation came out at 1.4% YoY, slightly above expectations while Core CPI remained unchanged at 0.9%. The publication had little impact on the currency. 

As the week draws to an end, the GBP/JPY will likely move more by yields than by Brexit-related news.

GBP/JPY Technical picture

The ¥148.64 low seen earlier is the immediate level of support. It is followed by the round number of ¥148.00 which was a cushion on February 14th. ¥146.90 is next.

On the topside, the daily high of ¥149.51 is the immediate resistance level and the last barrier before the round level of ¥150.00. The February 21st high of ¥150.93 is higher above and ¥152 is next.