- The prospects of an imminent Brexit deal gave the GBP / JPY a big boost on Thursday.
- The underlying bullish sentiment undermined the safe haven JPY and remained supportive.
The GBP / JPY cross continued to move higher throughout the first half of the European trading action and rallied above the 141.00 mark to reach almost four months over the course of the last hour.
A combination of supporting factors helped the cross build on the positive movement overnight and gain strong traction for the second session in a row on Thursday. With the final step, the GBP / JPY cross has now rallied over 400 pips from the levels below 137.00 hit on the first day of the current week.
Rising market expectations for an imminent Brexit deal were seen as one of the key factors that drastically improved the pound. In contrast, the underlying bullish sentiment in the equity markets undermined the safe haven Japanese yen. This, in turn, pushed the GBP / JPY cross to the highest level since early September.
Other than that, the possibility that some short-term trading stops could be triggered by a sustained move beyond the heavy 140.40-50 supply zone further contributed to the strong momentum. A subsequent buy above previous monthly swing highs, around the 140.70 region, may already have paved the way for further gains for the GBP / JPY crossover.
That said, the oscillators on the hourly charts are already showing overbought conditions and warrant some caution for aggressive bullish traders. Investors can also wait for official confirmation before positioning themselves for any further appreciation. Therefore, the main focus will remain on a joint press conference, scheduled in a few hours.
