GBP/JPY is down by more than 1% on the day
The pound is seeing no reprieve on the day as it trades to near its lowest levels against the dollar, euro and yen currently. Earlier, UK data came in as a beat but as mentioned then it was due to a temporary boost with factory activity rising as a result of a surge in new orders due to Brexit stockpiling. Such a rise is expected to decline sharply in the coming months and that won't help with economic data trends that have been heavily marred by Brexit uncertainty.
That leaves the pound very much in limbo as we await fresh developments on Brexit to determine where the next directional move will be.
But looking at GBP/JPY from a technical perspective, the break below the 139.00 handle is rather significant as it opens up a new range for the pair to be looking at. Price now tracks to its lowest levels last seen in April 2017 with key support levels such as the 50.0 retracement level @ 139.11 and the support region between 138.44 and 138.68 also under threat of giving way.
The break here opens up a move for sellers to keep driving price lower towards the January 2017 low @ 136.47 and the 17 April low @ 135.60. In between, there are a couple of minor support levels but the two above will be the key ones to look out for.
The yen continues to outperform as equities and risk sentiment remains sour to start the day and the technical breach above paves the way for further downside in the pair. The risk for sellers is a turnaround in risk/equities sentiment during US trading. Otherwise, as worries continue to mount for the global economy, the yen will continue to find added backing as we begin the year.
As for the pound, Brexit rhetoric is still very much taking a breather as we await UK lawmakers to return from their recess period on 7 January.
