GBP/JPY struggles for direction, flat-lined above mid-152.00s

The GBP/JPY cross quickly retreated around 30-35 pips from the early European session highs and was last seen trading in the neutral territory, near the 152.60-65 region.

The cross struggled to capitalize on its attempted intraday recovery move from the 152.30-35 area, or two-and-half-week lows, instead met with some fresh supply in the vicinity of the 153.00 mark. Concerns about the spread of the highly contagious Delta variant of the coronavirus continued weighing on investors' sentiment and acted as a tailwind for the safe-haven Japanese yen. This, in turn, was seen as a key factor that kept a lid on any meaningful upside for the GBP/JPY cross.

On the other hand, persistent Brexit-related uncertainties kept the GBP bulls on the defensive and further collaborated towards capping gains for the GBP/JPY cross. In the latest development, European Commission Vice President Maroš Šefčovič warned that the EU will step up legal proceedings without moves from the UK to remedy the violation of the Brexit agreement on Northern Ireland (NI). That said, a subdued USD price action helped limit the downside for the British pound, at least for now.

There isn't any major market-moving economic data due for release from the UK on Wednesday, leaving the GBP/JPY cross at the mercy of the broader market risk sentiment. Apart from this, the release of the highly-anticipated FOMC June meeting minutes will influence both, the JPY and the sterling, which might further contribute to produce some meaningful trading opportunities around the cross.

Technical levels to watch