GBP/JPY seesaws around 156.50 amid fresh Brexit jitters, downbeat yields

• GBP/JPY struggles to keep rebound from one-week low.
• UK Brexit Minister doubts EU proposals, sets December deadline to solve NI border issue.
• Covid cases jump in Britain, Virus-led restrictions ease in Japan.
• Risk catalysts are the key amid a light calendar.

GBP/JPY takes rounds to 156.50, fading the previous day’s recovery moves during Tuesday’s Asian session. The cross-currency pair struggles for a clear direction as mixed concerns for yen joins Brexit woes and coronavirus fears from the UK.

Risk appetite improved headlines from China and concerning Evergrande joined hopes of US stimulus, backed by US President Joe Biden and House Speaker Nancy Pelosi.

While upbeat sentiment weighed on the US Treasury yields and should have helped the Japanese yen (JPY), fears that recently easy activity restrictions in Tokyo and surrounding prefectures after 11 months of hardships may renew the COVID-19 cases probe the pair bears.

Elsewhere, UK Brexit Minister conveys dissatisfaction with the Eurozone’s Brexit proposals and gives time until December 2021 to solve the Northern Ireland (NI) issue. “The EU's current proposals to reform the Northern Ireland Protocol "don't go far enough", the UK's Brexit minister has said, as he set a December deadline for the two sides to find a solution,” said Sky News. It's worth noting that a delegation from Brussels will arrive in London on Tuesday to discuss the matter.

Additionally weighing on the cable is the fears of faster virus mutations in the UK and the latest jump in the covid cases. “UK has seen close to 40,000 new cases per day for the last 4 days. UK health secretary has warned people of not letting their guard down as there could be 100,000 COVID cases per day as the country heads into the winter season,” said CNBC.

Against this backdrop, Wall Street benchmarks closed positive, refreshing records, while the US 10-year Treasury yields seek further clues following two days of downside. That said, S&P 500 Futures print mild gains by the press time.

Given the light calendar and mixed catalysts, the Brexit talks and covid updates are important to forecast short-term GBP/JPY moves.

Technical analysis

Despite bouncing off 10-day EMA, around 156.15 by the press time, GBP/JPY remains below the previous support line from October 01, close to 157.15, keeping bears hopeful.