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  • GBP/JPY extends pullback from the five-week top.
  • UK Deputy signals extension of the lockdown for another month.
  • Chancellor Sunak announces the government’s coronavirus emergency response fund tripled to £14bn.
  • Fears of coronavirus keep looming over the UK and will be the key catalyst to watch.

GBP/JPY remains under pressure while trading around 134.80 during the Asian session on Tuesday. In doing so, the pair registers three-day losing streak after taking a U-turn from the highest since March 11, 2020.

The reason could be traced from the UK’s vulnerable positions to counter the coronavirus (COVID-19) crisis. As per Reuters, the total number of confirmed coronavirus infections in the UK increased by 4,342 to 88,621 whereas the death toll in the county rose by 717 to 11,329 as of 1600 GMT on Sunday.

With the sustained increase in the virus cases and death toll, the UK’s Deputy PM Dominic Raab is likely to announce the extension of the nationwide lockdown for another month. It should also be noted that The Guardian quoted Sir Patrick Vallance, Government Chief Scientific Adviser, while citing expectations that the number of deaths from coronavirus to continue rising this week before hitting a plateau that could last for up to three weeks.

Also to counter the pandemic, the British Chancellor Rishi Sunak recently mentioned that the government’s coronavirus emergency response fund, set up during last month’s budget to provide financial assistance to public services, has been almost tripled to more than £14bn, per The Guardian.

Elsewhere, the US is currently the global hotspot of the deadly virus while surpassing Italy but President Donald Trump keeps up the hope of recovery while citing positive results of the latest efforts.

Even so, the market’s risk-tone remains heavy with stocks in Asia marking mild losses during the initial minutes of the opening.

Given the lack of major data/events, GBP/JPY traders may keep eyes on the virus updates for fresh impetus.

Technical analysis

While 50-day SMA near 136.70 restricts the pair’s immediate upside, sellers may aim for 132.0, comprising 21-day SMA, during additional declines.