GBP/JPY Buyers Approach 159.00 on Cautionary Optimism and Mixed Brexit Concerns

GBP/JPY receives bids to re-establish an intraday high near 158.75, extending the previous day's rebound, as Tokyo opens for trading on Monday. Recent gains in the cross-currency pair may be attributable to improved sentiment and generally favorable Brexit-related news.

Boris Johnson, prime minister of the United Kingdom, prepares to revise the Northern Ireland Protocol (NIP) in the hopes of influencing the European Union's (EU) stance. On Tuesday, the UK government is anticipated to announce plans for unilateral changes to NIP. However, the bloc had already warned of such acts resulting in a trade deal reduction with the United Kingdom.

On the other side, the Financial Times (FT) reported that British manufacturers are optimistic as they compete to alleviate supply chain issues. In the previous two years, three-quarters of enterprises have boosted the number of British suppliers, according to a poll by Make UK, the manufacturers' trade organization.

In addition to Fed Chairman Jerome Powell's unchanged view of a 50 basis point (bps) rate hike in the next two meetings, the recent market's cautious optimism has been bolstered by the gloomy US mood data.

Notably, the continued virus-induced activity constraints in China and the deteriorating geopolitical conditions in Donbas are being used to investigate GBP/JPY buyers.

After Wall Street benchmarks rallied the previous day, the S&P 500 Futures reflect the sentiment with modest gains. In addition, 10-year US Treasury rates continue Friday's rebound gains, rising 1.5 basis points (bps) to 2.95 percent as of press time.

Amid a sparse domestic calendar, GBP/JPY traders may look to risk catalysts for directional cues in the near future. However, Tuesday's U.K. job data and Brexit updates will be essential for establishing direction.

Technical Evaluation

A one-month-old descending trend channel formation limits the GBP/short-term JPY's price range to 160.60 to 154.85.

GBP/JPY