GBP/JPY extends rally above 134.00 on Brexit hopes, attention turns to September highs

• GBP/JPY up more than 300 pips, having best day in years. 
• Pound is the best performer on hopes about a Brexit deal. 

The GBP/JPY pair looks unstoppable as it continues to rise. So far today it gained more than 300 pips, reaching the highest level in two weeks at 134.54. 

First it was JPY, the GBP 

The pair was already trading higher on the back of a decline of the Japanese Yen across the board amid an improvement in in risk sentiment as trade talk between US and China started in the US. 

During the American session Brexit headlines triggered a rally of the Pound. A deal now does not look impossible. Irish Prime Minister Leo Varadkar met today with UK Prime Minister Boris Johnson. Varadkar believed that it was now possible to come to an agreement before the end of the month. He added that what they achieved today “would be sufficient to allow negotiations to resume in Brussels."

The possibility of deal boosted the Pound dramatically. GBP/JPY is having the best day in more than a year. So far, despite overbought reading in short-term charts, no signals about a correction or exhaustion are seen. 

If the rally continues, attention would turn to September highs around 135.70; before that level some resistance is expected at 135.00. On the flip side, the 20-day moving average at 133.05/10 is now a relevant support followed by 132.20.