- GBP/JPY gains some positive traction on Thursday and climbs to session tops.
- An offered tone surrounding the JPY was seen as a key factor lending support.
The GBP/JPY cross finally broke out of its daily consolidative trading range and refreshed session tops in the last hour, with bulls now looking to extend the momentum beyond the 127.00 mark.
Following an early dip to the 124.25 region, the cross managed to attract some buying interest and has now recovered nearly 300 pips from 3-1/2 year lows amid an offered tone surrounding the Japanese yen.
Despite mounting fears over the economic fallout from the coronavirus pandemic, the Bank of Japan’s aggressive stimulus measures weighed on the Japanese yen and extended some support to the cross on Thursday.
It is worth recalling that the BoJ earlier today announced a second unscheduled purchase of JPY 300 billion worth of Japanese Government Bonds (JGBs) in an effort to ease concerns about tightening liquidity.
On the other hand, the British pound consolidated its recent slump and did little to influence the action, with the JPY price dynamics turning out to be an exclusive driver of the pair’s intraday momentum on Thursday.
The sterling remained on the defensive amid disappointment from the UK government’s delayed action on combating the virus outbreak and failed to gain any respite from a massive £330 billion stimulus package.
It, however, remains to be seen if the cross is able to capitalize on the recovery move or meets with some fresh supply at higher levels. The ongoing downward spiral in the global equity markets might help revive the JPY’s perceived safe-haven status against its British counterpart and keep a lid on any strong gains.
Technical levels to watch
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