GBP/JPY: off 7-week lows, but on the back foot

GBP/JPY has recovered from the 7-week low of 139.60, but remains on the back foot as Labour continues to put on a show that is forcing markets to consider a possibility of a hung UK parliament.

As per the latest report from Sky News, Conservatives have come out on top in Broxbourne, Nuneaton and Kettering. However, that has not helped Pound gain ground.

Labour victory: Good for Pound?

What if Labour wins the election? The consensus is that the Pound will take a worst beating since Brexit referendum. However, Labour win would also increase the odds of a Softer Brexit. Furthermore, Labour has promised high spending regime. Hence, Labour victory may not be all that bad for the British Pound. 

Meanwhile, a hung parliament is definitely bad news for the Pound, as it will create a whole new set of uncertainties when it comes to Brexit process. The GBP/JPY cross could register its biggest single day drop if we end up with a hung parliament.

GBP Plummets as Majority Eludes Conservatives in Exit Polls

GBP/JPY Technical Levels

The pair was last seen trading around 140.15 levels. Key support levels are 140.09 (Mar 31 high), 138.81 (200-DMA), 138.55 (76.4% Fib R of Apr low - May high). The key resistance levels are 140.38 (61.8% Fib R of Apr low - May high), 140.72 (June 6 low), 141.38 (100-DMA). The daily RSI is below 50.00, suggesting potential for more losses in the pair.