GBP/JPY moves back closer to weekly tops, just below mid-137.00s
- GBP/JPY built on the previous day’s goodish rebound of over 100 pips from weekly lows.
- The sterling edged higher in the absence of negative Brexit headlines and softer greenback.
- The risk-on mood undermined the safe-haven JPY and remained supportive of the uptick.
The GBP/JPY cross traded with a positive bias through the early European session and was last seen hovering near the top end of its weekly range, just below mid-137.00s.
The cross built on the previous day's strong recovery move of around 115 pips from weekly lows and gained some follow-through traction for the second consecutive session on Thursday. The uptick also marked the fourth day of a positive move in the previous five and was sponsored by some buying around the British pound.
In the absence of any negative Brexit-related headlines, the sterling benefitted from a softer tone surrounding the US dollar. This, coupled with the prevalent upbeat market mood dented the Japanese yen's relative safe-haven status against its British counterpart and provided an additional boost to the GBP/JPY cross.
The global risk sentiment remained well supported by reviving hoped for more US fiscal stimulus measures. After abruptly calling off talks with Democrats over the coronavirus aid package, the US President Donald Trump said on Wednesday that he was ready for gradual spending measures, including support for individuals, small businesses and airlines.
Despite the supporting factors, the uptick lacked any bullish conviction as investors preferred to wait for fresh Brexit updates. This makes it prudent to wait for some follow-through buying before positioning for an extension of the recent recovery move from the 133.00 mark, or near three-month lows touched on September 22nd.
There isn't any major market-moving economic data due for release from the UK on Thursday. Hence, the broader market risk sentiment, along with the incoming Brexit headlines will play a key role in influencing the GBP/JPY cross and produce some meaningful trading opportunities.
Technical levels to watch