- GBP/JPY finally broke down of its three-day-old trading range on Friday.
- The British pound was weighed down a combination of negative factors.
- The risk-off mood benefitted the safe-haven JPY and added to selling bias.
- A sustained break below 132.00 mark will pave the way for further decline.
The GBP/JPY cross continued losing ground through the mid-European session and dropped to four-day lows, around the 132.35 region in the last hour.
The cross came under some aggressive selling pressure on the last trading day of the week and finally broke down of its three-day-old trading range. The downward was sponsored by the emergence of some fresh selling around the British pound and a strong pickup in demand for the safe-haven Japanese yen.
The British pound remained depressed in the wake of this week’s report that the US is considering imposing tariffs on $3.1 billion of imports from the United Kingdom. This comes amid persistent Brexit uncertainties, which further took its toll on the sterling and exerted some heavy pressure on the GBP/JPY cross.
Meanwhile, worries that a surge in new coronavirus cases could trigger renewed lockdown measures dampened prospects for a sharp V-shaped global economic recovery. This, in turn, weighed on investors’ sentiment and benefitted the Japanese yen’s relative safe-haven status against its British counterpart.
With Friday’s slide, the GBP/JPY cross has now erased a major part of its weekly gains to the 134.00 neighbourhood. A subsequent slide below the 132.00 round-figure mark might prompt some aggressive technical selling and set the stage for the resumption of the pair’s two-week-old bearish trend.
Technical levels to watch
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