• GBP/JPY gained some positive traction on Monday, albeit lacked follow-through.
• Brexit woes overshadowed hawkish BoE expectations and undermined the GBP.
• Fresh COVID-19 jitters benefitted the safe-haven JPY and contributed to cap gains.

The GBP/JPY cross shot to a fresh daily high, around the 153.65 region during the early European session, albeit quickly retreated a few pips thereafter. The cross was last seen hovering near the lower end of its daily trading range, around the 153.20-15 region.

The cross gained some positive traction on the first day of a new week and built on Friday's goodish rebound from 100-day SMA support, around mid-152.00s. However, a combination of factors kept a lid on any further gains for the GBP/JPY cross, rather prompted fresh selling at higher levels.

The deadlock over the post-Brexit arrangement in Northern Ireland and fishing rights continued acting as a headwind for the British pound. Apart from this, surging COVID-19 cases in Europe benefitted the Japanese yen's safe-haven status and capped any meaningful upside for the GBP/JPY cross.

This, to a larger extent, offset an imminent interest rate hike move by the Bank of England in December and did little to provide any impetus to the GBP/JPY cross. That said, the recent repeated rebound from 100-day-SMA support warrants some caution for aggressive bearish traders.

There isn't any major market-moving economic data due for release from the UK on Monday, leaving the GBP/JPY cross at the mercy of the fresh Brexit-related developments. This further makes it prudent to wait for a strong follow-through selling before positioning for any further losses.

Technical levels to watch