- GBP/JPY registers downside following the recent JPY bid.
- The Times report suggesting gradual scaling back of coronavirus furlough scheme exerts additional weakness.
- UK death toll crosses Italy, highest in Europe.
- Off in Japan can keep virus/Brexit updates in the driver seat.
GBP/JPY declines to 132.09, down 0.32% on a day, in early Wednesday trading. In doing so, the pair registers four-day losing streak while also refreshing the weekly low.
The latest catalyst for the downside could be traced from the Times’ report suggesting that the UK Chancellor Rishi Sunak is preparing to “wean” businesses and workers off the government’s furloughing scheme by cutting wage subsidies.
It should also be noted that the run-up in British deaths due to the coronavirus (COVID-19) to the highest in Europe also weigh on the pair. “There have been 29,427 deaths in hospitals, care homes and the wider community across the UK, compared with 29,315 deaths in Italy,” said the BBC in its latest report.
Furthermore, Brexit uncertainty regained market attention after Irish Foreign Minister Simon Coveney said, as per The Guardian, Brexit talks are hurtling to another crisis point unless progress is made in the next two rounds of talks.
On the positive side, the UK-US trade talks began recently with the expectations favoring upbeat results to push the European Union (EU) towards east Brexit norms.
Moving on, the final reading of the UK’s Construction PMI for April, expected 22 versus 39.3, will decorate the British economic calendar whereas the virus/Brexit update will be the key drivers.
Technical analysis
A horizontal area comprising the previous month lows, near 131.90, as well as March 18 peak close to 130.35, holds the keys to the pair’s fall towards 130.00 round-figure. On the upside, a 50-day SMA level near 133.65 restrict recovery moves ahead of April month high surrounding 135.40/45.
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