- GBP/JPY accelerates its downtrend from 140.00 area to one-week lows at 134.45.
- Risk aversion boosts the yen against a vulnerable GBP.
- The sterling suffers on Brexit fears and speculation about negative interest rates.
The pound has accelerated its reversal from last week highs near 140.00 last week after breaking below 136.00 support area. Sterling has lost about 1.25% so far today, crushed by a risk-off sentiment and the looming Brexit concerns.
The yen gains on risk aversion
The pair is suffering on the back of the negative sentiment triggered by the US Federal Reserve on Wednesday. The Fed curbed risk appetite, warning about a deep economic contraction in 2020, and painful global recovery from the coronavirus shutdown. These gloomy perspectives have boosted demand for safe assets like the yen against riskier bets like the GBP.
On the other hand, the sterling remains vulnerable to Brexit concerns and market speculations of negative interest rates. The lack of progress after successive rounds of negotiations with the clock ticking towards the end of the transition period is boosting fears of a no-deal exit for the Union that will have a negative consequence for the UK economy.
GBP/JPY attempting to find support at 134.45
The pair is trying to set a base at 134.45 after having plunging nearly 200 pips through the day, and with the hourly and four-hour charts into oversold levels. On the downside, further decline below the mentioned 134.45 might send the pair towards the 50-day MA, at 13.45 before 133.05 (May 26, 27 highs).
On the upside, the pair should regain the 100-day SMA at 135.65 and extend beyond 136.20 (June 9 low) to ease bearish momentum and extend towards 137.35 (June 10 high).
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