- The GBP / JPY reversal from the 140.00 zone extends to 138.35.
- Brexit uncertainty and the Scottish referendum hurt the pound.
- GBP / JPy tests the trend line support at 138.40.
The pound sterling it is trading lower against the Japanese yen for the second day in a row, cutting most of the ground taken earlier this week. The pound’s reversal from the intraweek highs just below 140.00 has extended on Friday to the lows of 138.35 so far.
Libra sinks due to Brexit and Scottish referendum problems
The pound fell against its main rivals on Friday, weighed down by ongoing uncertainty over Brexit negotiations and talks about a new Scottish independence referendum.
The stalemate in Brexit trade talks continues with only five weeks left to close a deal to avoid a disorderly exit from the EU. Comments from some negotiators, warning that differences on key issues such as fishing rights continue to block the deal, have eroded investors’ confidence in a deal.
Beyond that, Nicola Sturgeon, leader of the Scottish National Party, said today that he wants to hold a second independence referendum in the first part of the next legislature, which begins next year. This has added negative pressure on the pound.
GBP / JPY: Test trend line support at 138.40
At the moment, the pair is testing support at the uptrend support line from the lows of October 30, now at 138.40. Below here, the psychological level of 138.00 and 137.20 (November 19 low) would come into focus. On the upside, immediate resistance is at 139.10 / 20 (intraday highs) and above here, 139.85 (Nov 25-26 highs) and 140.00.