GBP/JPY hit fresh 20-day low on Scottish referendum fears

Omkar Godbole FXStreet Contributor

All love is lost between GBP and Asian FX desks on fears Scottish government will call another independence referendum at a time when UK PM May is set to trigger the formal Brexit process under Article 50 next month.

GBP/JPY cross dropped to a fresh 20-day low of 139.01 levels. As per the Times report, Nicola Sturgeon and Theresa May are heading for a showdown over who has the right to call another independence referendum and when it should be held.

It is also being reported the UK Government is preparing for Nicola Sturgeon to use the start of the country's exit from the EU to call another vote on Scottish independence.

Also note that PM May is widely expected to trigger the Article 50 closer to the EU summit scheduled on Marc 9-10.

The resulting uncertainty is forcing investors to sell the British Pound. The Japanese Yen, being a carry currency could find fresh bids later in the day if the Scottish referendum news scares investors out of the risky assets.

GBP/JPY Technical Levels

The cross was last seen trading around 139.15 levels. The daily chart shows a bearish break from the symmetrical triangle pattern. Breach of 200-DMA at 139.04 would add credence to the bearish pattern and open doors for 138.34 (100-DMA), under which a major support is seen at 136.45 (Jan 16 low).

On the higher side, breach of 139.62 (Feb 17 low) would expose 140.00 (zero figure). A violation there could be followed by a rise to 140.63 (5-DMA).

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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