GBP/JPY: On the back foot around 134.40 amid Brexit, geopolitical uncertainty

  • GBP/JPY stays under pressure below 100-DMA.
  • Brexit, geopolitical tension negative affect market sentiment.
  • UK PM Johnson skips press conference with Luxembourg PM, says the Brexit deal with the EU will take some work.

With no signs of abating risk-off, coupled with Brexit uncertainty, the GBP/JPY pair remains on the back foot around 134.40 during the early Asian session on Tuesday.

Not only the Houthi attack, popularly believed to be supported by Iran, but pessimism surrounding Brexit deal with the EU also weigh on the pair.

Leading media channels, ranging from the Washington Post to NBC, support the US claims that Iran was behind the deadly attack on Saudi Arabian oil facilities, adding to concerns of increased tension inside the Middle East and the Arab nations’ relations with the US.

Elsewhere, the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson failed to deliver any results from his Luxembourg visit as the EU leaders keep demanding for details to support the UK PM’s request for no Irish backstop. Adding to the pessimism was Mr. Johnson’s absence at the press conference with the Luxembourgish counterpart, which in turn pushed Xavier Bettel to term the Brexit as a ‘nightmare’.

While no data is up for release from either the UK or Japan, trade/political/Brexit news will keep the market players entertained for the rest of the day.

Technical analysis

A daily closing above 100-day simple moving average (DMA) level of 135.16 becomes necessary for the pair to aim for late-July lows surrounding 135.70. Alternatively, a downside break below seven-day-old rising trend-line, at 133.20, could trigger fresh declines towards 133.00 and then to the 50-DMA level of 131.53.

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