GBP/JPY retakes 138.00 mark and beyond, lacks follow-through
- Boris Johnson says that he is not aiming for a no-deal Brexit outcome.
- The British Pound gets a minor lift following Johnson's positive remarks.
- The fact that the EU is not ready to renegotiate likely to cap further gains.
Buying interest around the British Pound picked up the pace in the last hour, lifting the GBP/JPY cross back above the 138.00 handle and back closer to near two-week tops.
After an initial dip to an intraday low level of 137.79, the cross regained traction and turned higher for the second consecutive session in reaction to positive comments by Boris Johnson - a favourite candidate to be the next UK PM.
Johnson reiterated that the government must deliver on the Brexit vote and the UK must leave the EU on 31 October. He further added that he was not aiming for a no-deal Brexit outcome, which provided a goodish lift to the British Pound.
However, the fact that the European Commission is not willing to renegotiate a deal even with a new UK PM held investors from placing any aggressive bullish bets and turned out to be one of the key factors capping any follow-through up-move.
Adding to this, the prevailing risk-off mood, as depicted by a negative trading sentiment around equity markets, underpin the Japanese Yen’s relative safe-haven demand and further collaborate towards capping intraday gains.
Hence, it would be prudent to wait for a strong follow-through buying before positioning for any further appreciating move, rather an extension of the pair’s recent recovery move from multi-month lows set earlier in June.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
