GBP/JPY surges back closer to 143.00 handle, overnight swing high
• Growing confidence that May will win the confidence vote prompts aggressive short-covering.
• Risk-on mood/US-China trade optimism dent JPY's safe-haven status and remain supportive.
The GBP/JPY cross rallied over 125-pips from intraday lows, around mid-141.00s, and has now moved within striking distance of overnight swing high.
Growing confidence that the UK PM Theresa May will be able to win the confidence vote later today prompted some aggressive short-covering around the British Pound and was seen as one of the key factors driving the cross higher.
This coupled with the prevalent positive mood around global equity markets, supported by renewed optimism over improving US-China trade relations, dented the Japanese Yen's safe-haven status and further collaborated to the pair's strong momentum to the 143.00 neighborhood.
It would now be interesting to see if bulls are able to maintain their dominant position or the up-move is seen as an opportunity to initiate some fresh bearish positions amid persistent uncertainty surrounding the UK's exit from the European Union.
Technical levels to watch
On a sustained move beyond the 143.00 handle, the cross is likely to accelerate the momentum further towards the 143.35-40 supply zone en-route weekly tops, around the 143.70 area. On the flip side, the 142.30-25 region now seems to protect the immediate downside and is closely followed by the 142.00 handle, below which the cross seems headed back towards testing the 141.50 support zone.