GBP/JPY hits one month low, UK budget statement eyed

The GBP/JPY cross traded with bearish bias for the fourth consecutive session and extended the downslide to hit fresh one-month low near 138.70-65 band.

The UK PM Theresa May's second Brexit bill defeat in the House of Lords on Tuesday, demanding a guarantee of "meaningful vote" by the Parliament on the outcome of Brexit talks, collaborated to the persistent selling pressure around the British Pound. Market participants now seemed worried that a further delay in triggering Article 50 would only prolong impending Brexit worries and continue weighing on the sterling. 

The coupled with a fresh wave of moderate risk-off mood in global financial markets further boosted the Japanese Yen's safe-haven appeal and dragged the cross back closer to the very important 200-day SMA support. 

Traders on Wednesday now look forward to the British government's budget statement, where focus would be on what Chancellor Paul Hammond will present to shield the UK economy from the potential impact of Brexit.

UK: Final Spring Budget to be the main event today – TDS

Technical levels to watch

Immediate support is pegged near 138.35-30 region (200-day SMA), which if broken decisively would turn the cross vulnerable to accelerate the slide below 138.00 round figure mark towards testing its next support near 137.50-45 area.

On the upside, the 139.00 handle now becomes immediate resistance to clear, above which the cross is likely to recover back to mid-139.00s resistance area. A follow through recovery has the potential to lift the cross beyond the key 140.00 psychological mark towards an important resistance near 140.30-35 region.