- GBP/JPY rallied over 100 pips from two-week lows touched earlier this Wednesday.
- The incoming Brexit-related headlines led to some intraday volatility around the GBP.
The GBP/JPY cross reversed an early European session slide to near two-week lows and refreshed daily tops, around the 136.70 region in the last hour, albeit lacked follow-through.
The cross extended this week's retracement slide from one-month tops, around the 137.80-85 region and remained depressed through the first half of the trading action on Wednesday. The British pound was pressured by concerns about new coronavirus restrictions and the possibility that the Bank of England could introduce negative interest rates.
The selling pressure surrounding the sterling picked up pace in the wake of negative Brexit-related headlines. Reports indicated that European Union leaders – scheduled to meet in Brussels on Thursday and Friday to discuss Brexit – will say that progress in talks with Britain is "still not sufficient" to seal a new trade deal.
Separately, Bloomberg – citing a person close to the negotiations – reported that the UK will not walk away from Brexit talks immediately. The person further added that the UK will continue its efforts to reach an agreement with the European Union on their future relationship beyond Prime Minister Boris Johnson’s October 15 deadline.
This, in turn, prompted some aggressive short-covering move around the British pound and led to the pair's strong intraday bounce of over 100 pips. Meanwhile, a subdued action around the safe-haven Japanese yen did little to influence the GBP/JPY pair's intraday volatile swings amid absent relevant market moving economic releases.
Technical levels to watch
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