GBP/JPY drops 100 pips in the run up to UK retail sales release

The GBP/JPY pair fell more than 100 pips to 148.18 in the last one hour, reportedly due to fears of UK-EU fallout and Yen strength.

The British Pound is not the most loved currency this Thursday as UK PM Theresa May is under pressure to make 'deal or no deal' ultimatum at the Brexit summit. 'No deal' would be damaging for both sides, however, markets tend to punish British Pound first.

Meanwhile, media reports in the UK say EU leaders expect no progress in negotiations from either side at  the two-day summit in Brussels. Longer the deadlock, more will be the political uncertainty. The drop in the GBP/JPY is accentuated by the decline in the USD/JPY pair.

Looking ahead - The immediate focus is on the UK retail sales release. Pound could strengthen if the UK data betters estimates, although the sustainability of gains depends on the outcome of the Brexit summit.

GBP/JPY Technical Levels

A break below 148.00 (zero figure) would expose 147.77 (Oct 17 low). A violation there could yield sell-off to 145.94 (50-DMA). On the higher side, a move above 148.50 (5-DMA) may see the pair re-test 149.00 (zero levels) and 149.12 (4-hour 100-MA).