GBP/JPY revisits falling trend line, bond yield spread hits one-month low

GBP/JPY is flirting with the support offered by the trend line sloping downwards from the August 2015 high and November 2015 high as the bears regained control after the BOE pushed out the odds of the first rate to 2018. 

The spread or the difference between the UK 10-year gilt yield and the Japanese 10-year bond yield dropped to 1.079, the lowest level since late June. 

BoE governor Carney warned of a potential economic hit due to Brexit uncertainty and sounded most pessimistic since Brexit vote. The net effect is the bearish outlook for the GBP as suggested by the falling yield spread. 

GBP/JPY Technical Levels

The cross clocked a low of 144.37 in Asia before recovering slightly to trade around 144.60 levels. A break above 144.82 [July low] would open doors for 145.27 [July low] and 145.41 [5-DMA + 10-DMA]. On the lower side, breach of support at 144.08 [50-DMA] could yield a sell-off to 143.22 [50% Fib R of 138.67-147.77] and 142.83 [100-DMA].