GBP/JPY Holds Above 153.00, Upside Potential Looks Limited Amid Brexit Woes

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GBP/JPY gained some positive traction on Wednesday amid a weaker JPY. Brexit jitters, dovish BoE may cap gains amid cautious sentiment in markets.

The GBP/JPY pair edged higher through the early European session and climbed to fresh daily tops, around the 153.35 regions in the last hour.

After holding on to the 100-day SMA support, the GBP/JPY pair attracted some dip-buying on Wednesday and reversed some of the previous day’s losses.

The gains were exclusively sponsored by the emergence of some selling around the Japanese yen, although a combination of factors capped the pair’s significant gains.

The generally weaker tone around equity markets might benefit the JPY’s relative safe-haven status versus its UK counterpart.

That, along with concerns that the UK government will trigger Article 16 of the Northern Ireland Protocol, will act as a drag for sterling and further collaborate to limit GBP/JPY gains.

Regardless, last week’s dovish Bank of England decision to keep interest rates steady supports bearish traders and supports prospects for further declines.

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Nonetheless, it will still be prudent to wait for a sustained break below the 100-day moving average support, around 152.60, before positioning for an extension of the four-week-old downtrend.

There are no major market-moving UK economic data due for release on Wednesday, leaving the GBP/JPY pair on the cusp of fresh developments regarding Brexit.

Regardless, the broader market risk sentiment should influence the safe-haven demand for the JPY and allow traders to take some short-term opportunities around the pair.

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