GBP/JPY flirts with daily high, around 154.00 mark amid receding safe-haven demand

• GBP/JPY gained some positive traction on Wednesday, though lacked strong follow-through.
• Signs of stability in the equity markets undermined the safe-haven JPY and extended support.
• BoE rate hike bets remained supportive; UK political crisis kept a lid on any meaningful gains.

The GBP/JPY cross traded with a mild positive bias through the early European session, with bulls now awaiting a sustained strength beyond the 154.00 round-figure mark.

Following the previous day's good two-way price moves, the GBP/JPY cross attracted some buying on Thursday and is now looking to build on this week's bounce from the very important 200-day SMA. Signs of stability in the financial markets – despite rising geopolitical risks – undermined the safe-haven Japanese yen and acted as a tailwind for the cross.

On the other hand, expectations that the Bank of England will hike interest rates further at the upcoming meeting extended some support to the British pound. This was seen as another factor lending some support to the GBP/JPY cross, though the recent political developments in the United Kingdom held back bulls from placing aggressive bets and capped gains.

In fact, British Prime Minister Borish Johnson has been facing calls to resign amid public anger over a series of alleged lockdown-busting parties in Downing Street. UK foreign minister Liz Truss said on Wednesday that the findings of an internal enquiry into allegations will be published soon, which might determine PM Johnson's future.

In the absence of any major market-moving economic releases from the UK, the fundamental backdrop warrants some caution for aggressive bullish traders. Hence, it will be prudent to wait for a strong follow-through buying before confirming that the GBP/JPY pair has bottomed out and positioning for any meaningful appreciating move in the near term.

Technical levels to watch