GBP/JPY: The Guppy is waiting for Brexit news to set direction

• The European Union publishes Brexit withdrawal treaty on Wednesday.
• GBP/JPY is trapped in a 4 days tight range of 149.00-150.00.

The GBP/JPY is trading down at around 148.85 ahead of the European Union publishing the Brexit withdrawal draft. 

The Brexit withdrawal draft is about a 100-pages long document that is likely to ignore Theresa May’s requests regarding the Brexit transition period being prolonged beyond 2020 and the risk regarding the Irish border. 

On the Yen side of the story, the Bank of Japan Governor Kuroda said that once the price target for inflation has been reached and the economy is stable the BoJ would not continue its aggressive monetary easing. The news did not have any significant effect on the market with  the GPB/JPY locked within ts 4-day trading range of 149.00-150.00.

The next significant data for Yen is on Thursday with Tokyo core CPI expected to rise 1.4% over the year in February, up from previous reading of 1.3% y/y.    

Technically the GBP/JPY is trading in the 149.00-150.00 tight range. To the downside the next support is the 148.00 level which is the cyclical low and also 20 pips away from the 200-period SMA on the daily chart. Further down the 146.00 level is the 61.8% Fibonacci retracement from the August 2017-February 2018 bull run. To the upside resistance is seen at 151.00 figure in conjunction with 100-period SMA on the daily chart. The next key resistance is seen at the 152.00 figure which is a confluence zone with the 50-period SMA on the daily chart and the 23.6% Fibonacci retracement from the August 2017-February 2018 bull run.

GBP/JPY daily chart