GBP/JPY slips from 13-day top to sub-134 area as UK struggles with coronavirus

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  • GBP/JPY fails to extend the previous four-day advances.
  • UK PM Johnson tested positive, intensive care limited to those almost certain to survive.
  • Fitch cuts its UK credit rating with a negative outlook, Britain’s coronavirus restrictions could last six months.

With coronavirus outbreak infecting the UK PM Boris Johnson, GBP/JPY steps back from multi-day top to 133.85, down 0.50%, amid the Asian session on Monday. The UK has been suffering from the pandemic off-late and the country’s deputy chief medical officer recently cited that the restrictions levied due to the pandemic could last six months.

The Guardian quotes Dr. Jenny Harries, deputy chief medical officer for England, during her daily press conference on Sunday to signal that the current restrictions in the UK could last for six months. Earlier, the UK Telegraph came out with the news that the intensive care for coronavirus patients now limited to those ‘reasonably certain’ to survive, as per the sources from the National Health Services (NHS) London Trust.

There are around 19,522 cases of infections with 1,228 deaths as of Sunday, per The Guardian. Among them, the latest inclusion of the UK PM Johnson shocked the global market players.

On the other hand, Japan is likely to extend its entry ban to those who traveled the US, the UK, South Korea and most of Europe as per Reuters’ latest piece whereas BOJ highlighted capital buffer and liquidity requirements as a counterplay to its Open Market Operations (OMO). Furthermore, the global rating agency Fitch downgraded the UK’s credit rating from AA to AAA- with negative outlook.

While portraying the risk-tone, the US 10-year treasury yields decline nine basis points (bps) to 0.65% whereas Japan’s NIKKEI drops nearly 4.0% to 18,630 by the press time.

Looking forward, a lack of major data could keep weighing on the market’s risk-tone and help the Japanese yen to recover some of its latest losses. Also, the British pound might extend its recent losses amid the pandemic fears.

Technical analysis

Sustained trading beyond a 21-day SMA level of 133.00 keeps buyers hopeful. Though, 200-day SMA, currently near 137.30, becomes the tough nut to crack for the bulls.

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