GBP/JPY - Down but not out, defends 149.00 handle

• GBP/JPY under slight pressure on the letter of no confidence in PM May.
• 10-Y UK-Japan yield spread rises in JPY negative manner.

The pair is down 0.45 percent in Asia, but still holding above the psychological support level of 149.00.

Pound gapped lower as investors digested the news published over the weekend that 40 members of the PM's Conservative party have signed a letter of no confidence in Theresa May's leadership.

However, as per Bloomberg report, May's leadership is still not endangered as opponents are now eight lawmakers short of what’s needed for a leadership challenge. Furthermore, the 10-year UK-Japan yield differential jumped by 7 basis points to 130 basis points on Friday.

Thus, the cross has been able to defend 149.00. As of writing, the pair is trading at 149.15. Ahead in the day, the pair is likely to track the UK political news and the action in the benchmark bond yield spread.

GBP/JPY Technical Levels

A break below 149.00 (psychological level) would open up downside towards 148.77 (ascending 50-day MA) and 148.43 (Nov. 9 low). On the higher side, a move above 149.45 (1-hour 100-MA) could yield a rally to 149.80 (1-hour 200-MA) and 150.00 (psychological levels).