- GBP/JPY staged a goodish intraday bounce from the lowest level since May 7.
- A turnaround in the global equity markets undermined the safe-haven JPY.
- A modest USD pullback benefitted the GBP, which provided an additional lift.
The GBP/JPY cross managed to rebound around 90 pips from multi-week lows and edged back closer to the top end of its daily range during the early European session. The cross was last seen trading with modest intraday gains, comfortably above the 152.00 round-figure mark.
The cross extended its recent sharp pullback from multi-year tops and witnessed some follow-through selling through the first half of the trading action on Monday. However, a combination of factors helped limit the downside, rather assisted the GBP/JPY cross to attract some buying near the 151.30 region.
A dramatic turnaround in the global risk sentiment – as depicted by a strong intraday bounce in the US equity futures – undermined the Japanese yen’s safe-haven status. On the other hand, the British pound benefitted from a modest USD pullback, which was seen as another factor that extended some support to the GBP/JPY cross.
That said, concerns about the EU-UK collision over Northern Ireland protocol. This, along with worries that the government’s decision to delay the final stage of easing lockdown measures could hinder the nascent economic recovery, might act as a headwind for the sterling. This, in turn, might cap gains for the GBP/JPY cross.
There isn’t any major market-moving economic data due for release from the UK on Monday. Hence, it remains to be seen if the GBP/JPY cross is able to capitalize on the move or meets with some fresh supply at higher levels. Investors now look forward to the upcoming Bank of England meeting on Thursday for a fresh impetus.
Technical levels to watch
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