- GBP/JPY witnessed some follow-through selling for the fourth straight session on Friday.
- The risk-off mood continued benefitting the safe-haven JPY and exerted some pressure.
- Fears of new COVID-19 restrictions in the UK, Brexit further contributed to the downfall.
The GBP/JPY cross managed to rebound around 40-50 pips from one-month lows and was last seen trading with modest losses, just below the key 135.00 psychological mark.
The cross prolonged its recent bearish trajectory and witnessed some follow-through selling for the fourth consecutive session on Friday, which also marks the sixth day of a negative move in the previous seven. The downtick was exclusively sponsored by the prevalent risk-off environment, which tends to benefit the safe-haven Japanese yen.
Investors remain concerned about the potential economic fallout from fresh restrictions to curb the second wave of coronavirus infections. Adding to this, the uncertainty over the outcome of the US presidential election next week further dampened the market mood. This was evident from a steep decline in the US equity markets.
Meanwhile, fears that the UK government could take stricter lockdown measures to curb the rapid pace of growth in COVID-19 cases and persistent Brexit uncertainties kept the GBP bulls on the defensive. The combination of factors dragged the GBP/JPY cross further below the 135.00 mark, to its lowest level since September 28.
However, oversold conditions on intraday charts prompted traders to lighten their bearish positions and assisted the GBP/JPY cross to stage a modest bounce. That said, any further recovery might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly amid absent relevant market moving economic releases.