- GBP/JPY gained strong positive traction on Tuesday and shot to over one month tops.
- A modest USD pullback extended some support to the GBP and remained supportive.
- The risk-on mood undermined the safe-haven JPY and provided an additional boost.
A sudden pickup in demand for the British pound pushed the GBP/JPY cross to over one-month tops, around the 152.70 region during the first half of the European session.
A combination of factors assisted the GBP/JPY cross to gain strong positive traction on Tuesday and break through the 152.25-30 supply zone. As investors looked past the mixed UK jobs report, the sterling found some support from the emergence of some selling around the US dollar. On the other hand, receding safe-haven demand weighed on the Japanese yen and provided a goodish lift to the cross.
The UK Office for National Statistics reported that the number of people claiming unemployment-related benefits fell 58.6K in August as against 71.7K decline anticipated. The slight disappointment, however, was offset by the expected downtick in the unemployment rate to 4.6% during the three months to July. The data did little to impress the GBP bulls or provide any impetus to the GBP/JPY cross.
That said, some repositioning trade ahead of the US consumer inflation figures dragged the USD further away from the two-week tops touched on Monday. This, in turn, was seen as a key factor that benefitted the British pound. Apart from this, the underlying bullish sentiment in the financial markets undermined demand for traditional safe-haven currencies, including the JPY, and remained supportive of the GBP/JPY pair’s goodish intraday positive move to the highest level since August 12.
With the latest leg up, the cross now seems to have confirmed a near-term bullish breakout and seems poised to appreciate further. Hence, a subsequent strength back towards reclaiming the 153.00 mark, en-route the 153.30 horizontal resistance, remains a distinct possibility.