GBP/JPY struggles near 6-week lows, just below mid-145.00s

Haresh Menghani FXStreet

• Brexit uncertainties continue to dent sentiment surrounding the British Pound.
• A slight improvement in investors’ risk-appetite does little to lend any support.

The GBP/JPY cross remained under some heavy selling pressure for the third consecutive session on Wednesday and dropped to fresh six-week lows in the last hour.

Market expectations that the UK PM Theresa May will not accept the rumoured EU offer of a UK-wide customs union as a way around the Irish backstop issue prompted some fresh selling around the British Pound.

RTE news reported Tuesday that the new proposal will have to be negotiated beyond the Withdrawal Agreement as a separate treaty. May, however, wants a UK-wide customs backstop to be legally binding and included in the divorce bills.

The downfall seemed rather unaffected by a modest risk-recovery, as depicted by signs of stability across global equity markets and which tends to dent the Japanese Yen’s safe-haven status, though might help limit further downside, at least for the time being.

With bearish sentiment surrounding the British Pound turning out to be an exclusive driver of the pair’s slide to the lowest level since Sept. 13, marked participants now look forward to the May's speech later today amid rising speculation of a potential leadership challenge in her leadership of Tory Party.

Technical levels to watch

A follow-through selling has the potential to continue dragging the pair further towards the key 145.00 psychological mark, below which the slide could further get extended towards 144.60-50 support area. On the flip side, any meaningful attempted recovery might now confront stiff resistance near the 146.00 handle and is followed by the 146.30-35 supply zone.

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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