GBP/JPY holds above 153.00, upside potential seems limited amid Brexit woes

• GBP/JPY gained some positive traction on Wednesday amid a weaker JPY.
• Brexit jitters, dovish BoE might cap gains amid a cautious market mood.

The GBP/JPY cross edged higher through the early European session and climbed to fresh daily tops, around the 153.35 region in the last hour.

Having defended the 100-day SMA support, the GBP/JPY cross attracted some dip-buying on Wednesday and reversed a part of the previous day's losses. The uptick was exclusively sponsored by the emergence of some selling around the Japanese yen, though a combination of factors kept a lid on any meaningful upside for the cross.

A generally softer tone around the equity markets might benefit the JPY's relative safe-haven status against its British counterpart. This, along with worries that the UK government will trigger Article 16 of the Northern Ireland Protocol, should act as a headwind for the sterling and further collaborate to cap gains for the GBP/JPY cross.

Apart from this, last week's dovish Bank of England decision to hold interest rates steady favours bearish traders and supports prospects for further losses. That said, it will still be prudent to wait for a sustained break below 100-DMA support, around the 152.60 region, before positioning for an extension of a four-week-old downtrend.

There isn't any major market-moving UK economic data due for release on Wednesday, leaving the GBP/JPY cross at the mercy of any fresh Brexit-related developments. Apart from this, the broader market risk sentiment will influence demand for the safe-haven JPY and allow traders to grab some short-term opportunities around the cross.

Technical levels to watch