GBP / JPY struggles near daily lows, just above 139.00

• GBP / JPY witnessed a modest pullback from the two-week high, breaking a four-day winning streak.
• Brexit anxieties caused a long period of decline around the British pound and put downward pressure.
• The recovery in safe haven demand benefited the Japanese yen and added to the intraday selling bias.

It was seen that the crossing GBP/JPY it moved near the lower end of its daily trading range, with bearish traders now looking at a sustained break below 139.00.

The cross struggled to capitalize on its recent positive move to two-week highs and began to pull back from near the key psychological level 140.00. The GBP / JPY cross continued to lose ground during the middle of Thursday’s session and, for now, it appears to have broken four consecutive days of winning streak.

Brexit anxieties sparked a long period of decline around the British pound, which, along with reviving demand for the Japanese yen as a safe haven, put some downward pressure on the GBP / JPY cross. Comments from British Finance Minister Rishi Sunak, who says he is hopeful a deal can be reached, did not impress the bulls.

It is worth reporting that negotiators have yet to reach a compromise on the key points: the so-called level playing field, fisheries and state aid rules. With very little time left before the Brexit transition periods end on December 31, the stalemate seemed to have dampened recent optimism about a last-minute Brexit deal.

Concerns about a no-deal Brexit resurfaced after UK Prime Minister Boris Johnson reiterated that the UK’s position on fisheries has not changed and that they will not request additional time to negotiate the trade deal with the European Union. Separately, the president of the European Commission, Ursula van der Leyden, said that disagreement over access to Britain’s fishing waters continues to block progress.

On the other hand, the safe haven Japanese yen benefited from a softer tone in US equity markets. As markets took in progress toward developing a potential vaccine for the highly contagious coronavirus disease, investors chose to take some gains off the table following the recent strong bullish rally.

Now it will be interesting to see if the GBP / JPY cross is able to find any support at lower levels or if a sustained break below 139.00 sets the stage for a further short-term depreciation move. That said, Brexit-related incoming headlines will continue to play a key role in influencing the British pound and deserve some caution before placing aggressive directional bets.

Technical levels