GBP/JPY drops to lowest level since Nov. on hard Brexit fears

The GBP/JPY cross came under renewed selling pressure on Tuesday and was seen building on to yesterday's sharp slide below the very important 200-day SMA support.

Currently trading around 140.20-30 band, the cross remained well-offered for the second consecutive day and dropped to its lowest level since Nov. 30. Comments from the UK PM Theresa May resurfaced concerns of a ‘hard Brexit’ and have been attracting some renewed selling pressure around the British Pound. 

Meanwhile, the prevalent cautious sentiment around riskier assets is lending support to the Japanese Yen's safe-haven demand and also collaborating to the pair's slide on Tuesday. 

Looking at the technical picture, the cross on Monday decisively broke below 200-day SMA support. Hence, a follow through weakness below 140.00 psychological mark would confirm a break-down and exert additional selling pressure around the GBP/JPY cross, turning it vulnerable to continue drifting lower in the near-term.

Technical levels to watch

On a sustained break below 140.00 mark, the cross is likely to accelerate the slide towards sub-139.00 level (138.85-80 area) ahead of 138.00 round figure mark. On the upside, 141.00 handle now becomes immediate resistance to clear. Momentum above this immediate hurdle could get extended but is likely to be limited at the very important 200-day SMA support break-point, now turned resistance, near 141.70-75 region. Only a decisive move back above this important hurdle would negate any near-term bearish bias and assist the cross to resume with its prior appreciating move.