GBP/JPY slips to 11-week low on risk aversion

• GBP/JPY prints 11-week low below 143.00 in Asia.
• JPY continues to push higher with Trump ratcheting up trade tensions.

GBP/JPY hit an 11-week low of 142.90 this Thursday morning in Asia amid simmering US-China trade tensions and the resulting risk aversion.

President Trump, while speaking at a rally in Florida soon before press time, said that China broke the trade deal and that the US will not back down until China stops cheating. These comments seem to have strengthened the bid tone around the already buoyant anti-risk JPY.

Also, the futures are on the S&P 500 are now reporting a 0.30% drop. Trump’s comments come a day after China’s Commerce Ministry warned that it will take “necessary retaliatory measures” if the US moves ahead with plans to raise tariffs on $200 billion worth of Chinese goods from the current 10% to 25%.

With trade tensions escalating, the GBP/JPY pair may remain under pressure during the day ahead. That said, China’s top negotiator is traveling to Washington for trade talks and there is a widespread belief that cooler heads will prevail and a deal will be struck, in which case JPY crosses may see a “V-shaped” recovery.  

As of writing, the pair is trading at 143.06, having dropped for the third straight day on Wednesday.  

Technical Levels