GBP JPY continues sharp breakout surge

GBP/JPY continued to surge on Thursday to hit its highest level since early-February, extending the sharp breakout move that has been in place for more than a week. This breakout was initiated last week on April 18th, after UK Prime Minister Theresa May called for a snap election to be held in June.

This political move was undertaken so that May could secure a solid mandate to deal with difficult negotiations with the European Union as she sees fit, amid the ongoing formal process of UK/EU separation. The pound rose sharply on that announcement due in large part to the fact that May’s Conservative Party remains far ahead of the Labour Party in polling. In turn, this further bolstered speculation that May’s leadership would lead to a more concessionary stance towards the EU, a potentially better deal for the UK, and a lower likelihood of a “hard Brexit.” This would then promote greater stability for both the UK and its currency.

As the pound has continued to rise in a relief rally, the safe-haven Japanese yen has fallen sharply for more than a week as a strong, risk-on environment has taken hold of the markets. This has especially been the case after this past weekend’s first round of the French presidential election, which showed the market-friendlier Emmanuel Macron gain increasing support over his far-right rival, Marine Le Pen.

Amid diminishing Brexit concern that has alleviated pressure on the pound, as well as decreased risk aversion in the markets that has reduced demand for the yen, GBP/JPY has correspondingly been boosted sharply to break out well above a key downtrend line extending back to December’s 148.00-area high. This surge has been sustained up to Thursday and could continue to drive GBP/JPY higher, barring any UK political surprises or major market-disrupting events on a global basis. The next key upside resistance level is around the 145.00 area. With any further breakout above 145.00, GBP/JPY could once again begin to target the critical 148.00 resistance objective.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.