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  • GBP/JPY seesawed between tepid gains/minor losses on Thursday.
  • The JPY was weighed down by BoJ’s action and remained supportive.
  • The prevailing risk-off mood to keep a lid on any attempted recovery.

The GBP/JPY cross lacked any firm intraday direction and seesawed between tepid gains/minor losses, above 3-1/2 year lows set on Wednesday.

Following the previous session’s steep intraday slide of over 600 pips, the cross now seems to have entered a bearish consolidation phase and was seen oscillating in a range between the 125.00-125.50 region through the early European session on Thursday.

The British pound remained depressed in the wake of Britain’s controversial measures on combating the coronavirus pandemic and failed to gain any respite from the UK government’s £330 billion stimulus package announced on Tuesday.

Despite the negative factor, the downside remained cushioned, at least for the time being, amid an offered tone surrounding the Japanese yen, which was being weighed down by the Bank of Japan’s aggressive stimulus measures.

In its latest efforts to ease concerns about tightening liquidity – triggered by coronavirus pandemic – the BoJ on Thursday announced a second unscheduled purchase of JPY 300 billion worth of Japanese Government Bonds (JGB) JGBs.

Meanwhile, the ongoing brutal selloff across the global equity markets might continue to benefit the yen’s perceived safe-haven status against its British counterpart. This might eventually keep a lid on any attempted recovery for the cross.

Hence, it will be prudent to wait for some strong follow-through buying before confirming that the cross might have already bottomed out in the near-term and positioning for any further recovery amid absent relevant fundamental catalyst.

Technical levels to watch