GBP/JPY rebounds to 149.00 handle ahead of UK retail sales

Haresh Menghani FXStreet

• Continues to find some support near the 148.00 handle.
• Fading safe-haven demand provides an additional boost.
• Brexit uncertainty keeps a lid on any strong up-move.
• UK monthly retail sales data in focus.

The GBP/JPY cross gained some positive traction on Thursday and has now recovered part of previous session's losses, back closer to multi-week lows.

With investors looking past Wednesday's mixed UK jobs data, the cross once again managed to rebound from the 148.00 neighborhood and extended its steady recovery move through the early European session on Thursday.

A slight improvement in investors' risk appetite, as depicted by positive trading sentiment across global equity markets, dented the Japanese Yen's safe-haven appeal and was seen driving the cross higher.

The up-move, however, lacked conviction amid some renewed worries over Brexit negotiations. According to the latest headlines, via Politico, the EU is said to reject the UK bid for the bespoke trade deal and kept the GBP bulls on the back-foot.

• Carney’s speech: Brexit transition deal is in everyone's interest

Traders now look forward to the UK monthly retail sales data, expected to show a modest rise of 0.1% m-o-m in October, for some fresh trading impetus.

• UK: Expect flat official retail sales volumes during October - Nomura

A disappointing reading would reaffirm that a subdued wage growth is squeezing household spending power and dampen prospects for any additional BoE rate hike move in the near-future, eventually prompt some fresh selling around the British Pound.

Technical levels to watch

Momentum beyond the 149.00 handle is likely to confront immediate resistance near the 149.25-30 region, above which the cross could make a fresh attempt towards reclaiming the key 150.00 psychological mark.

On the downside, weakness below mid-148.00s might continue to find strong support near the 148.00 handle, which if broken would turn the cross vulnerable to extend the downslide towards the 147.00 mark with some intermediate support near the 147.30 region.

Author

Haresh Menghani

FXStreet

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

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