GBP/JPY climbs further beyond 140.00 mark, fresh two-month tops

• GBP/JPY continued gaining traction for the third consecutive session on Wednesday.
• Hopes of a last-minute Brexit deal was seen as a key factor underpinning the pound.
• The upbeat market mood weighed on the safe-haven JPY and remained supportive.

The GBP/JPY cross climbed further beyond the key 140.00 psychological mark and refreshed two-month highs during the early European session. The cross was last seen hovering near the top end of its daily trading range, around the 140.15-20 region.

A combination of factors assisted the cross to attract some dip-buying near the 139.30 region and moved into the positive territory for the third consecutive session on Wednesday. Renewed hopes for a last-minute Brexit deal continued underpinning the British pound, while the upbeat market mood was seen denting the Japanese yen's safe-haven status.

As EU-UK trade talks continue in London, the UK government suffered a heavy defeat in the House of Lords over its controversial legislation. Peers overwhelmingly voted to remove a section of the so-called Internal Market Bill, which acknowledged to break international law and allow ministers to overrule parts of the UK's agreement with the EU.  

The UK PM spokesperson confirmed that the legislation will not return to the Commons until the end of this month. The delay could allow the EU and UK time to find a compromise on key sticking points – level playing field, fisheries and state aid rules. This, in turn, fueled speculations that a Brexit deal is now imminent and benefitted the sterling.

On the other hand, the latest optimism over a potential vaccine for the highly contagious coronavirus diseases remained supportive of the prevalent risk-on mood in the global equity markets. This was seen as another factor that benefitted the sterling at the cost of safe-haven Japanese yen and pushed the GBP/JPY cross to the highest level since September 7.

With the latest leg up, the cross now seems to have found acceptance above the 140.00 mark. Hence, some follow-through strength towards the 140.70 horizontal resistance, en-route the 141.00 level, now looks a distinct possibility. That said, the incoming Brexit-related headlines might still infuse some volatility around the GBP/JPY cross.

Technical levels to watch