With the recent bouts of risk-off sentiment along with political woes and Brexit concerns for the UK, it’s no major surprise to see GBP/JPY under such heavy selling pressure. And, as noted in Monday’s COT report, the British pound has seen a pickup of short bets and closure of longs, whilst traders are now the least bearish on the Japanese yen in 3-months. So whilst some could argue that GBP/JPY is technically oversold, traders remain positioned for further downside and headline risks could still cap any upside.

We can see on the daily chart that GBP/JPY has fallen over 8% from its year to date high and broken out of a topping pattern early May. After reaching 136.53, its lowest level since the flash-crash, the bears have been kind enough to allow GBP/JPY to consolidate for 8 sessions and drift higher within a potential bear-flag. Whilst this allows for another cycle higher, we’re on the lookout for bearish momentum to return the cross to its dominant, bearish trend.

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DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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