- GBP / JPY continues to gain ground for the third day in a row on Wednesday.
- Hopes for a last-minute Brexit deal have been seen as a key factor underpinning the British pound.
- Optimistic market sentiment weighs on the safe-haven JPY and supports the pair’s upward move.
The crossing GBP / JPY has risen above the key psychological level of 140.00 and has reached new two-month highs during the European session on Wednesday, around the 104.25-30 region. At time of writing, the pair is back slightly towards 139.90, still positive on the day.
A combination of factors has helped the crossing to attract some shopping near the 139.30 region and it has moved into positive territory for the third day in a row on Wednesday. The Renewed hopes of a last-minute Brexit deal continue to prop up the British pound, while market optimism has weighed on the safe-haven Japanese yen.
As EU-UK trade talks continue in London, the UK government suffered a major defeat in the House of Lords over its controversial domestic market law legislation. Lawmakers voted overwhelmingly to remove a section of the so-called Internal Market Bill, which recognized violating international law and allowed ministers to void parts of the UK Withdrawal Agreement with the EU.
The British prime minister’s spokesman confirmed that the legislation will not return to the Commons until the end of this month. The delay could give the EU and UK time to find a compromise on the key points to reach an agreement such as a level playing field, fishing rules and state aid. This, in turn, fueled speculation that a Brexit deal is now imminent and benefited the British pound.
On the other hand, The latest optimism about a potential coronavirus vaccine has continued to support the risk appetite prevalent in global stock markets. This has been seen as another factor that has benefited the British pound at the expense of the safe-haven Japanese yen, pushing the GBP / JPY cross to the highest level since September 7.
With the latest move to the upside, the cross is looking to find acceptance above the 140.00 level. Therefore, some continuation force towards the horizontal resistance at 140.70, en route to the 141.00 level, now seems a possibility. That said, the Brexit-related news could still infuse some volatility around the GBP / JPY cross.
Credits: Forex Street
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