GBP / JPY rises to highs of over a week, looking for a move above 139.00

• GBP / JPY gained strong positive traction for the second consecutive session on Monday.
• The British pound rose from the upbeat UK PMI and did not appear to be affected by Brexit anxieties.
• Optimism about COVID-19 vaccines undermined the safe haven JPY and remained supported.

The crossing GBP/JPY jumped to seven-day highs during the middle of the European session, and the bulls are now looking for a sustained move above 139.00.

A combination of support factors helped the cross gain strong positive traction on the first day of a new trading week and take advantage of last week’s modest rebound from the 137.20 area. The British pound benefited from optimistic UK PMIs and did not appear to be affected by Brexit anxiety.

Indeed, the EU’s main Brexit negotiator Michel Barnier said that fundamental differences remain in trade talks with the UK. It is worth reporting that the negotiators have failed to reach a compromise on three sticking points: the so-called level playing field, fisheries and state aid rules.

However, sterling bulls ignored the comments and remained optimistic about the possibility of a last-minute Brexit deal. Apart from this, market optimism undermined the demand for the Japanese yen as a safe haven and continued to support the strong positive movement of the GBP / JPY pair.

Global risk sentiment remained well supported by positive news about a possible vaccine for the highly contagious coronavirus disease. In the latest development, the University of Oxford and AstraZeneca announced that their COVID-19 vaccine was 90% effective in one of the dosing regimens.

Meanwhile, a shot created by Moderna and another made jointly by Pfizer and the German company BioNTech were found to be more than 90% effective in their own late-stage tests. This, in turn, boosted investor confidence and was evident from a good recovery in global equity markets.

Market participants are now looking forward to hearings on the Bank of England’s monetary policy report before Parliament’s Treasury Committee, to be held later on Monday. So it remains to be seen whether the GBP / JPY cross can capitalize on the move or whether the bulls choose to lighten their positions.

Technical levels