GBP/JPY jumps to 1-month highs

The GBP/JPY pair is consolidating gains above 143.50 supported by a slide of the Japanese yen across the board and also by some strength of the pound that is the best performer on Monday among the most traded European currencies. 

During the European session, the pair peaked at 143.67, the highest level since August 8, after breaking key technical levels. The rally was supported by a slide of the yen that dropped amid risk appetite. In Wall Street, the Dow Jones is up by more than 200 pips while many European markets finished with gains of more than 1%. In the bond market, the US 10-year yield bounced from the lowest since November and rose to 2.11%, highest in six days. 

The improvement in risk sentiment and some positive developments over Brexit negotiations offered support to the pound. 

Technical outlook 

At the beginning of the week, GBP/JPY rose above 142.70 (Sep 6 & 7 high) and then broke September highs and the key 143.00 handle. A consolidation on top of 143.00 would signal a continuation to the upside.

The recent rally sent the price from the support zone at 141.50 (20-day moving average) to rise more than 200 pips, ending a consolidation phase that had been in place since late August. 

On the downside, if the pair is unable to hold on top of 143.00 and drops sharply, It would make a sharp reversal, opening the doors for a test of the key 141.50 support. A daily close below that level would point toward a bearish continuation.