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GBP/JPY jumps more than 200 pips as pound soars on Brexit headlines

  • Pound soars amid speculations about a Brexit bill deal. 
  • Yen tumbles on risk appetite after Republican Senate tax bill advances. 

The GBP/JPY pair rose more than 200 pips from daily lows. It bottomed during the American session at 146.97, the lowest level since October 9 and during the last three hours, it rose back above 149.00. At the moment of writing is trading at 149.17 at the highest level in a week. 

The first boost to the pair came from a rally of the pound following reports that pointed toward a potential deal on the Brexit bill. Some headlines were later denied by government officials. The Financial Times mentioned that according to several diplomats familiar with the talks, “the UK would assume EU liabilities worth up to €100bn although net payments, discharged over many decades, could fall to less than half that amount.”

Afterward, the pair received a second boost from the USD/JPY rally. The US dollar rose sharply after the Senate Budget Committee approved the Republican tax reform bill, a step before the vote in the chamber that would take place during the week. At the same moment, the Dow Jones index rose further to new record highs, it was up 0.85%, almost 200 points. 

The combination of some optimism on Brexit negotiations and the step forward in the tax reform bill in the US Congress, offset concerns that emerged after North Korea launched another missile. 

Technical levels 

The GBP/JPY went from testing a key support area at 147.00 (Oct lows) to rise sharply, breaking technical resistance levels. Now the momentum favors the upside, as price consolidates above a short-term downtrend. A daily close around current levels would be the first on top of the 20-day moving average in three weeks. 

To the upside, immediate resistance is seen at 149.35 (last week high), 149.65 (Nov 7 low) and 150.00. On the flip side, support now might lie at 148.95 (Nov 24 high), 148.50 (Nov 28 European session high) and 147.80 (Nov 23 & 27 high). 

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