GBP/JPY slumps to 2-week lows below 144.50 after UK PM May's remarks
- Political turmoil in the UK continues to weigh on the GBP.
- UK PM May says she would fight a leadership challenge.
- GBP/JPY records biggest daily drop of the year.
Following a consolidation phase below 115, the GBP/JPY came under a renewed bearish pressure in the last hour and fell to its lowest level of November at 144.25. As of writing, the pair was trading at 144.57, losing more than 2% on a daily basis.
Appearing in a press conference to address the political instability amid a number of resignations, most importantly of Brexit Secretary Dominic Raab, in the Conservative party, British Prime Minister Theresa May recognized some members of her party were uncomfortable about the backstop solution and added that she would fight a leadership challenge. "Alternative of repudiating backstop would collapse negotiations and end hopes of a deal," May added. None of May's remarks eased markets' concerns and the pound sterling failed to find demand in the session.
UK PM May's Comments
- UK PM May: Serving in high office is a heavy responsibility.
- UK PM May: We will bring the deal back for a vote in the House of Commons.
- UK PM May: Alternative of repudiating backstop would collapse negotiation and end hopes of deal.
- UK PM May: I will make appointments to the government in due course.
- UK PM May: There will not be a second referendum.
Earlier today, the data published by the UK's Office for National Statistics showed that retail sales declined 0.5% on a monthly basis in October to fall short of the market expectation of 0.2% and put some extra weight on the GBP's shoulders. Additionally, the latest reports showed that money markets were no longer expecting a BoE rate hike in 2019.
Technical levels to consider
The pair could face the initial resistance at 145 (psychological level) ahead of 145.55 (100-DMA) and 146.70 (200-DMA). On the downside, supports are located at 144.25 (daily low), 143.60 (Oct. 31 low) and 142.75 (Oct. 26 low).