The GBPJPY experienced an initial surge earlier today on reports that a Brexit deal had been agreed by negotiating parties. However, the pair has begun to trade off its daily highs after the Democratic Unionist Party (DUP) expressed reservations a short while ago about the new Brexit deal. The GBPJPY is now trading at 140.22 as at the time of writing, after hitting an intraday high of 141.502.
The DUP is an influential party in Northern Island and the ratification of any new deals on the Irish backstop component of the Brexit Withdrawal Agreement is crucial to enable this deal pass in the UK Parliament.
This report goes against earlier reports yesterday that the DUP had ratified the deal, which had sent the British Pound soaring across major pairs.
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Technical Outlook for GBPJPY
The GBPJPY has been in an upswing since October 10 when positive headlines from the Brexit negotiations began to hit the newswires. The GBPJPY’s uptrend on the 4-hour chart has been guided by the 14-day moving average as well as a rising support trendline; both of which have been providing support.
Today’s price action also found support at the central pivot line (139.02). This area can therefore be regarded as the support for the day. We also see the rising trendline intersecting the central pivot to reinforce this support.
On an intraday basis, I expect this price level to be the key support to watch for. If the price breaks below this area, 137.96 (S1 pivot and previous high of July 1/October 11 in resistance-support role reversal) will be the next intraday target. Below this area, further intraday support areas are at 136.43 (S2 pivot) and 135.36 (S3 pivot). The S3 pivot also marks a role reversed previous resistance which capped price of GBPJPY between September 12 and September 17.
The bias however continues to remain bullish and if this holds true, the pullback being seen currently may bounce off the ascending support trendline to push once more for 141.62 (May 25 high) and possibly 143.14 (May 9/10 highs).
More Brexit headlines are still being expected, and these are expected to create more volatility before the market closes for the weekend.