GBP/JPY tumbles to fresh 6-month lows, around 127.00 mark and rebounds

• GBP/JPY witnessed some aggressive selling and tumbled to six-month lows on Wednesday.
• The JPY benefitted from reviving safe-haven demand and aggravated the bearish pressure.

The GBP/JPY cross plunged to fresh six-month lows, around the 127.00 mark in the last hour, albeit managed to recover few pips thereafter.

Following the previous day’s two-way price action, the cross came under some aggressive selling pressure on Wednesday and was being weighed down by a combination of negative factors.

The latest optimism over the UK government’s £330 billion stimulus package on Tuesday was largely offset by growing concerns over the economic fallout from the coronavirus pandemic.

This comes on the back of Britain’s late move to discourage mass gathering and controversial measures on combating the coronavirus pandemic kept exerting some heavy pressure on the pound.

This coupled with a fresh selloff in the equity markets, amid fears of an imminent global recession, provided a modest lift to the Japanese yen’s safe-haven status against its British counterpart.

The cross dived over 300 pips and took along some short-term trading stops near the 129.00 level. A subsequent slide below the 128.00 mark aggravated the intraday bearish pressure.

It will now be interesting to see if the cross is able to find any support amid extremely oversold conditions or bears aim towards challenging September 2019 swing lows, around the 126.70-65 region.

Technical levels to watch