GBP/JPY struggles to hold 150.00 as yields retreat

• GBP/JPY dribbles inside a small range after stepping back from weekly high.
• Brexit optimism fades, US-Russia tension, fears from China challenge previous optimism.
• Japan’s Q3 GDP , Tankan survey flashed upbeat results for December.
• Brexit, Omicron updates are the key for fresh impulse.

GBP/JPY holds onto the previous day’s pullback from a one-week high inside a choppy range above 150.00, around 150.35 during Wednesday’s Asian session.

The cross-currency pair refreshed weekly top the previous day amid the market’s optimism but Brexit concerns and a lack of major data/events weighed on the quote afterward. Adding to the bearish bias are the recently down US Treasury yields and challenges to risk appetite.

Among the key risk catalyst is the fears of a prolonged Brexit deadlock as the UK’s readiness to resolve fishing tussles with France couldn’t please the European Union (EU) to step forward and help overcome the Northern Ireland (NI) border issue. It’s worth noting that the bloc’s monetary help to the Northern Ireland of late is being considered escalating tension among the old neighbors.

Elsewhere, the US warns Russia of sanctions and helps Ukraine with military power if Kremlin invades Kyiv. In addition to the fears emanating from the US-Russia story, the market’s optimism also fades amid concerns over China’s struggling real-estate firms like Evergrande and Kaisa. Furthermore, China’s dislike of the US boycott of the 2022 Beijing Olympics also tests risk appetite.

That said, the global markets previously cheered receding fears of the South African coronavirus variant, dubbed as Omicron, as well as hopes of more stimulus from China. On the same line was the absence of Fedspeak ahead of the next week’s Federal Open Market Committee (FOMC) meeting.

Talking about data, Japan’s Q3 GDP dropped below -0.8% initial forecast to -0.9% while Tankan Manufacturers’ survey for December was quite optimistic.

Against this backdrop, US 10-year Treasury yields snap two-day uptrend around 1.47%, down one basis point (bp), whereas S&P 500 Futures struggle to follow its Wall Street benchmark that rallied the most since March.

Moving on, a light calendar probes momentum traders but risk catalysts can trigger GBP/JPY moves and hence become worth observing.

Technical analysis

GBP/JPY seesaws between September’s low near 148.95 and 200-day EMA level surrounding 151.00 with a bearish bias.