GBP/JPY extends recovery, still below 150.00
- Limited recovery as yen gains strength after weak start.
- Pair gains for second-day in-a-row, still 110 pips below pre-BoE rate hike levels.
- Pound up amid Brexit negotiations optimism.
The GBP/JPY pair is up on Monday, rising for the second day in a row as it continues to recover from the sharp slide of last Thursday. It is still trading significantly below the level it had before the Bank of England’s decision.
Still weak, but not that much
Last Thursday, the Bank of England rose the benchmark interest rate but the message was tilted to the dovish side, and the pound plummeted. GBP/JPY fell from levels near 1-month high above 151.00 to 148.65. On Friday it held above the 148.60/70 support and recovered some ground. Today the pair approached last week lows but bounced to the upside, rising above 149.50.
It peaked at 149.88, and during the last hours, it has been moving with a bullish bias in the very short-term but unable to break Asian session highs. It continues to move in a corrective mode.
The yen gained some momentum during the US session and limited the upside. US bond yields continued to decline on Monday and supported the Japanese currency. On Asian hours, yen spiked lower following comments from Bank of Japan Governor Kuroda about sticking to current policy.
Regarding the pound, some optimism over Brexit negotiations offered some arguments for the rectory of the pound.
Levels to watch
To the upside, resistance levels might be located at 150.00 (Oct 30 high), 150.45/50 (Oct 23 high) and 150.90 (Oct 26 high). On the flip side, immediate support is seen around 149.40 (US session low), followed by 149.05/10 and then 148.65 (Nov 2 & 3 low).