• The latest UK political turmoil kept the GBP bulls on the defensive.
• PM May remains firm on her position and defends her Brexit plan.
• Increasing prospects for May's leadership challenge likely to cap gains.
The GBP/JPY cross was seen oscillating in a narrow trading band, around the key 145.00 psychological mark, and consolidating overnight slump to two-week lows.
The latest political turmoil in the UK rattled the British Pound and prompted some aggressive selling on Thursday. The cross tanked over 350-pips from the 148.00 neighborhood in a knee-jerk reaction to the UK Brexit minister Dominic Raab's resignation, which was followed by several other ministers and ministerial aides.
Adding to this, letters calling for a no-confidence vote made it worst for the British Pound and dragged the cross to an intraday low level of 144.25. The selling pressure abated after the UK PM Theresa May stood firm on her position and defended her Brexit plan, helping the cross to witness a modest rebound from daily lows.
The attempted recovery, however, seemed lacking strong conviction/follow-through, albeit was supported by May's comments in the last hour, saying that the Brexit deal maintains the integrity of the UK and believed that we got a good deal with the EU.
However, with May's leadership challenge expected to happen quickly, possibly overlapping the special EU Brexit summit on November 25, any further up-move seems more likely to be utilized as an opportunity to initiate some fresh selling positions.
Technical levels to watch
The 145.45-50 region is likely to act as an immediate resistance, above which a bout of short-covering could lift the cross further towards reclaiming the 146.00 handle. The 144.85-80 region now seems to have emerged as an immediate support, which if broken might turn the cross vulnerable to head back towards overnight swing lows, around the 144.25 level, en-route the 144.00 round figure mark.
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