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GBPJPY – On the Verge of Breakdown?
Ever since Boris Johnson opened his mouth and suggested that Article 50 was coming sooner rather than later, cable has been under a relentless selling assault. This week there is little meaningful data on the UK docket, but the damage from rhetoric has been done. The pound has been a sell every rally trade and we see nothing in the immediate horizon that would change that dynamic.
Meanwhile, USD/JPY has been under selling assault as well as shorts focus on the the key 100.00 barrier and risk aversion flows make the pair vulnerable to breaching that level. Which is the GBP/JPY cross remains the strongest momentum sell trade in the currency market. The pair is now perched near the key 130.00 support level, but a break below could open a slew of stop runs and ultimately the pair could see 125.00 as selling from both side continues unabated.