GBP/JPY defends key support, risk reversals hit one-month low

• GBP/JPY defends key rising trend line support.
• Risk reversals indicate rising demand for GBP puts.

The GBP/JPY pair found takers around the support offered by the ascending trendline (sloping upwards from Aug. 24 low and Nov. 28 low) in Asia and moved higher to 150.80 levels.

The pair managed to avoid a break below the trend line largely due to upbeat UK manufacturing data and uptick in the USD/JPY data today.

However, the bearish bias in the options market has strengthened. The one-month 25 delta risk reversals fell to -1.15 (lowest level since Dec. 8) yesterday. It indicates rising demand for bearish bets on the GBP (put options).

Focus on Brexit

As per Reuters report, Britain's Prime Minister Theresa May is scheduled to meet executives from major finance companies today to give them a clearer idea of what Britain's European Union exit will mean for them.

It is feared that London's vast financial services industry (which accounts for more than 10 percent of GDP) could be at a risk. There is already evidence of job losses in London's financial industry due to Brexit related uncertainty.

The uncertainty could cap gains in the British Pound. Meanwhile, the pair could extend gains if the European stocks regain bid tone.

GBP/JPY Technical Levels

A break above 151.19 (Dec. 26 low) would open up upside towards 151.94 (Nov. 1 high) and 152.08 (5-day MA). On the downside, breach of support at 150.38 (session low) would shift risk in favor of a drop to 149.41 (Dec. 15 low) and 149.00 (zero levels).