GBP/JPY tumbles to one-month lows on Brexit concerns and risk aversion

• Pound under pressure amid Brexit uncertainty falls again across the board.
• Yen extends gains amid risk aversion as Wall Street drops sharply.

The GBP/JPY pair has fallen more than 300 pips since the beginning of the week. Recently it reached the lowest level in a month under 138.00 as equity prices tumble in Wall Street and on the back of Brexit concerns.

The yen is among the top performers in the market boosted by risk aversion and also by the decline in USD/JPY. In Wall Street, the Dow Jones is off lows, falling 1.60% or 455 points while the Nasdaq losses 2.60%. The negative tone from last week remains in place.

The other key factor behind GBP/JPY slide is the pound that is losing ground across the board on Tuesday. Brexit woes affected the pound. Comment from the UK and the EU continue to show lack of progress. The UK government department head quit over Brexit disagreements.

Technical outlook

The GBP/JPY dropped to 137.85 and then bounced modestly. As of writing it trades at 138.10, almost two hundred pips below Monday’s close. It is one of the biggest decliners among FX crosses on Tuesday.

The area around 138.00 in GBP/JPY is the immediate support. A consolidation below would suggest more weakness ahead, targeting the 137.40 area. If the pound holds above some consolidation seems likely considering the extreme oversold technical readings. Resistance levels lie at 138.30 followed by 138.70.