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GBP/JPY stable above 149.00 handle, Brexit update awaited

   •  Fails to benefit from upbeat UK data.
   •  Brexit update to remain in focus.

The GBP/JPY cross extended overnight slow recovery move from near three-week lows and held marginally above the 149.00 handle.

Currently hovering in the 149.15-20 band, the cross has now recovered around 70-pips from previous session's swing lows but failed to benefit from today's mostly upbeat UK macro data.

In fact, the UK manufacturing sector ended the third quarter on a strong note, helping the broader measure of industrial production to smash expectations and record growth for the fourth consecutive month. Adding to this, the UK visible goods trade deficit also narrowed more than expected and came in at £11.2bn for September, easing some bearish pressure surrounding the British Pound.

The positive reading, however, to some extent, got negated by worse-than-expected decline in construction output, slumping by 1.6% during September, the biggest fall since March 2016.

Moreover, growing frustration over lack of any progress over the Brexit talks, coupled with the prevalent cautious environment around global financial markets, which tends to benefit the Japanese Yen's safe-haven appeal, further collaborated towards keeping a lid on any meaningful up-move for the cross. 

Investors now look forward to the UK Brexit Minister David Davis and his European counterpart Barnier's joint Brexit update press conference at 11.30 GMT today. The NIESR's update on the UK's GDP outlook might also influence the British Pound and provide some fresh impetus. 

Technical levels to watch

Immediate resistance is pegged near the 149.60 area, above which a fresh bout of short-covering could lift the cross beyond the key 150.00 psychological mark towards weekly highs resistance near the 150.30-35 region.

On the flip side, sustained weakness back below the 149.00-148.90 region would turn the cross vulnerable to break below 148.45 level (yesterday’s low) and head towards testing the 148.00 handle. 

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