GBP/JPY struggles to ignore Brexit, geopolitical fears on the way to 162.00, UK PMIs eyed

• GBP/JPY remains mildly bid during sluggish session, retreats from intraday high.
• Fresh Brexit woes join fears emanating from China, North Korea to weigh on GBP/JPY price.
• Upbeat yields, easing hawkish concerns surrounding BoJ propel prices.

GBP/JPY grinds higher around 161.60 during early Monday, struggles to extend intraday gains amid dicey markets. In addition to the sluggish sentiment, geopolitical fears emanating from China and North Korea, as well as Brexit woes, also probe the cross-currency buyers. Even so, upbeat US Treasury bond yields and easing hawkish bias about the Bank of Japan (BoJ) seem to put a floor under the Yen price.

Japanese Prime Minister (PM) Fumio Kishida pushes for an emergency United Nations (UN) Security Council meeting amid growing fears from North Korea after the hermit kingdom fired two ballistic missiles towards Tokyo, both of which landed outside Japan's EEZ.

Elsewhere, the failure of the latest meeting between US Secretary of State Antony Blinken and China's top diplomat Wang Yi seemed to restore US-China ties. The reason could be linked to a Chinese diplomat’s comments saying that the US must change course and repair the damage done to Sino-US ties by indiscriminate use of force. On the same line, US ambassador to the United Nations, Ambassador Linda Thomas-Greenfield, said Sunday that China would cross a “red line” if the country decided to provide lethal military aid to Russia for its invasion of Ukraine.

It should be noted that the US 10-year Treasury bond yields rose to the highest levels since early November in the last week, before retreating to 3.82%, as hawkish concerns surrounding the US Federal Reserve’s (Fed) next move underpin recession woes.

On the contrary, hawkish bias from the Bank of Japan’s (BoJ) new policy board seemed to have faded of late as the key diplomat from Tokyo, including Japan PM Kishida, indirectly unveiled their expectations of BoJ’s easy money policy’s extension.

Additionally, the Telegraph came out with the news suggesting a fresh Brexit blow as it said, “UK PM Rishi Sunak forced to ‘pause’ protocol deal amid backlash from senior Tories and DUP.” It should be noted that the British media previously raised expectations of the much-awaited Brexit deal in Northern Ireland. On the same line, EU Commissioner for Interinstitutional Relations and Foresight Maroš Šefčovič said on Friday that they made good progress in Brexit talks with British Foreign Secretary James cleverly, as reported by Reuters.

Given the off in the US and Canada and a light calendar, the GBP/JPY pair may witness further hardships in trading ahead of the first readings of the UK’s February month PMIs, up for publishing on Tuesday.

Technical analysis

GBP/JPY remains bullish between the 21-day and 200-day Exponential Moving Average (EMA), currently around 160.30 and 161.85 at the latest.