GBP/JPY ends recovery and tumbles to 2-week lows

• Pound under pressure on political concerns. 
• Next round of Brexit negotiations ahead. 
• Yen up amid demand for safe-haven.

The pound ended abruptly the recovery against the yen and is back under pressure. GBP/JPY dropped from levels on top of 150.00, reaching at 148.52 the lowest since October 20.

GBP/JPY losses 3-day gains in hours 

The pair is falling more than a hundred pips today, erasing the gains of the previous three trading days. So far the decline found support around the 148.60 area. 

The pound came under pressure today on the back of political concerns. Another crisis emerged after the British International Development Secretary Priti Patel failed to declare meetings with Israeli officials in a breach of diplomatic protocol.

“It is our view that GBP remains vulnerable to political uncertainty going forward most specifically regarding Brexit. Although we are optimistic that an EU/UK trade pace will eventually be agreed, all Brexit proceedings to date suggest that this could be a last minute compromise. In the meantime uncertainty is likely to weigh on UK investment and growth potential. The implication is that GBP has the potential to slip further on a 12 mth view before snapping back around March 2019”, said analysts from Rabobank.

Another event to take into account is that the next round of Brexit negotiations is scheduled for tomorrow and Friday. The event represents a risk in both directions for the pound. 

On the side of the yen, some risk aversion boosted the demand for the currency but the rally was limited by US bond yields that moved all day so far in a modest range. 

Technical levels 

GPB/JPY is testing the 148.60/70 zone that capped the slide last week: a consolidation below would clear the way for an extension to 148.45 and then 148.00 and 147.75 (Oct 17 low). To the upside, resistance levels might be seen at 149.55 (Nov 3 high), 150.15 (daily high) and 150.45 (Oct 23 high).