GBP/JPY impressive 155 pip rally hits a wall at daily resistance
- GBP/JPY off to an impressive start om the week so far.
- Bulls have met a critical resistance area, but a new catalyst may have to wait until the end o the week in UK data.
- Brexit is the rotting carcass in this rocket-ship.
- Unless the USD and yen breakdown entirely on a surge in risk appetite, upside prospects are limited.
GBP/JPY has been one of the best performing crosses, with the bulls rallying some 155 pips to a previous resistance level.
At the time of writing, GBP/JPY is trading at 135.81 having rallied from 134.33 the low to a high of 135.90.
Fundamentally, a risk-on tone at the start of the week has weakened the yen, although the US dollar has also been crumbling which has given rise to a bid on the pound.
Cable has eked out a 0.75% advance on the day so far despite worsening tones withing the Brexit debacle.
In the latest headlines, as reported by the UK's press, UK'S PM Boris Johnson "has been pushing for the UK to fully cut ties with the bloc without a deal, former President of the EU Commission, Jean-Claude Juncker has claimed, as negotiations between Britain and Brussels remain deadlocked."
However, it is worth noting that the pound is probably also benefitting from a robust euro as well.
More on that here: The Chart of the Week: EUR/USD to complete a reverse H&S prior to next leg higher?
And, in the same light, it is also worth considering the backdrop of a resilient equities space pertaining to vaccine hopes supporting optimism, weighing on both the DXY and the JXY, -0.24%.
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On the UK data front, June Retail Sales and July PMIs are both on Friday.
The UK exiting the lockdown measures could also be a supportive factor.
It should be noted that the changes in consumer spending behaviour and general social distancing will prevail for a long time to come yet.
GBP/JPY levels