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  • GBP/JPY bounces off the lowest levels in six weeks.
  • Downbeat US Treasury yields weigh on the Japanese yen, UK’s Brexit, covid woes defend bears.
  • 89% of Japanese concerned over covid resurgence if Olympics, Paralympics staged this summer.
  • Risk catalysts, Fedspeak become the key amid a light calendar.

GBP/JPY consolidates recent losses around 152.30, up 0.10% intraday, as markets in Tokyo open for Monday’s trading. In doing so, the pair rises for the first time in the last five days as the Japanese yen (JPY) bears the burden of the downbeat US Treasury yields amid a lackluster session.

The US 10-year Treasury yields remain pressured for the third consecutive day, tracking the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, by the press time. The risk barometer seems to justify the market’s rate hike expectations following the last week’s US Federal Open Market Committee (FOMC) meeting.

It’s worth noting that fresh clues suggesting fewer odds to keep the UK’s virus-led lockdown beyond July 05, per the Sky News, adds to the GBP/JPY pair’s strength. Furthermore, polls from Japan’s Kyodo news, showing 86% of people are concerned about a rebound in COVID-19 cases if the Tokyo Olympics and Paralympics are staged this summer add to the pair’s recent strength.

It should, however, be observed that the pair buyers are cautious ahead of this week’s Bank of England (BOE) monetary policy meeting and also weigh the Brexit deadlock to hesitate in conveying the bullish bias. On the same side could be the news showing the spike in the UK’s covid infections, mainly relating to the Delta variant.

Talking about the data, the UK’s Rightmove House Price Index for June jumped above 2.1% YoY to 7.5% and offered an extra strength to the GBP/JPY upside.

Against this backdrop, S&P 500 Futures drop 0.12% whereas Japan’s Nikkei 225 begins Monday’s trading with around 2.0% losses, tracking Friday’s Wall Street performance.

Moving on, a lack of major data/events could keep GBP/JPY traders clueless, which in turn highlights the covid and Fed updates as the key catalysts.

Technical analysis

Multiple levels since March restrict short-term GBP/JPY declines around the 152.00 threshold, breaking which an ascending trend line from mid-February, near 151.45, could test the pair sellers. It should, however, be noted that the bulls aren’t likely to risk entries until the quote stays below April’s top surrounding 153.40.