GBP/JPY Price Analysis: Below 133.00 capped by trendline resistance

• GBP/JPY remains capped below downward trending resistance at 133.45.
• Pound suffers as the coronavirus and a new tariffs rift threaten the economic recovery.

The pound has extended its reversal from Tuesday’s highs right above 134.00 with a nearly 0.4% decline, to session lows at 132.65. The daily charts show the pair on a clear downtrend channel, with upside attempts capped below trendline resistance from early June’s peak, now at 133.45 area.

Investor’s fears that a second wave of COVID-19 infections might derail economic recovery and news reports suggesting that the US would be weighing on imposing new tariffs on European imports have hammered risk sentiment on Wednesday, increasing demand for safe-havens like the Japanese yen.

On the downside, the sterling is being contained above June 23 low at 132.65 so far. Below here, bears might tighten their grip on the pair, and send it towards June 22 low at 131.75 before May 22 low at 130.70.

On the upside, there is an important resistance level at 133.45/50 area, were the 50-day SMA meets the mentioned trendline resistance from early June highs. A breakthrough beyond that level might send the pair towards 134.60 (50% Fibonacci retracement of the February-March decline) and the 100-day SMA, at 135.00.  

GBP/JPY daily chart

GBP/JPY key levels to watch