GBP/JPY consolidates in a range around mid-135.00s, closer to multi-month lows

• Improving risk sentiment dent JPY’s safe-haven status and lend some support.
• No-deal Brexit fears continue to weigh on the GBP and cap any strong recovery.

The GBP/JPY cross lacked any firm directional bias and seesawed between tepid gains/minor losses through the mid-European session on Thursday.

After the previous session's slump to six-month lows and a subsequent modest bounce, the cross now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading band around mid-135.00s.

The prevalent risk-on mood - amid expectations of further monetary easing by global central banks, undermined the Japanese Yen's safe-haven demand and was seen as one of the key factors that helped stall the recent downfall.

However, persistent fears of a no-deal Brexit, coupled with this week's awful UK PMI prints held investors from placing any aggressive bullish bets around the British Pound and kept a lid on any meaningful recovery.

Given the UK political and economic uncertainty, the recent dovish shift by the BoE Governor Mark Carney further sets the stage for additional weakness and hence, any attempted bounce might still be seen as a selling opportunity.

Meanwhile, relatively thin liquidity conditions on the back of a holiday in the US might help limit the downside on Thursday, though a slide below the key 135.00 psychological mark still remains a distinct possibility.

Technical levels to watch