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  • GBP/JPY comes under some fresh selling pressure on Thursday.
  • Reviving safe-haven demand for the JPY weighed on the cross.

The GBP/JPY cross edged lower through the early European session on Thursday and eroded a part of the previous session’s positive move to over one-month tops.

A combination of factors failed to assist the cross to build on the overnight strong gains, triggered by improvement in the gauge of optimism in the manufacturing sector, rather prompted some selling on Thursday.

It is worth recalling that the CBI’s Quarterly Business Situation Index jumped sharply to +23 in January from -44 in October and marked the stronger level since April 2014 – also the largest quarterly swing since 1958.

The data added to the latest optimism led by Tuesday’s stronger-than-expected UK wage growth figures and forced investors to temper expectations for an imminent interest rate cut by the Bank of England.

As investors assess the possibility of a BoE rate cut at its upcoming meeting on January 30, British pound consolidated the previous session’s strong intraday gains and held traders from placing fresh bullish bets.

On the other hand, Concerns of the coronavirus outbreak in China continued benefitting the Japanese yen’s perceived safe-haven status and turned out to be one of the key factors exerting some pressure on the cross.

The cross has now weakened back below the 144.00 round-figure mark, retreating around 90 pips from the overnight swing high, and was being exclusively driven by reviving safe-haven demand.

It will now be interesting to see if the cross is able to attract any dip-buying interest at lower levels or continues with the ongoing corrective slide amid absent relevant market-moving economic data from the UK.

Technical levels to watch