GBP/JPY bounces off 1-month lows, still in the red below 135.00 mark
|- GBP/JPY witnessed some follow-through selling for the fourth straight session on Friday.
- The risk-off mood continued benefitting the safe-haven JPY and exerted some pressure.
- Fears of new COVID-19 restrictions in the UK, Brexit further contributed to the downfall.
The GBP/JPY cross managed to rebound around 40-50 pips from one-month lows and was last seen trading with modest losses, just below the key 135.00 psychological mark.
The cross prolonged its recent bearish trajectory and witnessed some follow-through selling for the fourth consecutive session on Friday, which also marks the sixth day of a negative move in the previous seven. The downtick was exclusively sponsored by the prevalent risk-off environment, which tends to benefit the safe-haven Japanese yen.
Investors remain concerned about the potential economic fallout from fresh restrictions to curb the second wave of coronavirus infections. Adding to this, the uncertainty over the outcome of the US presidential election next week further dampened the market mood. This was evident from a steep decline in the US equity markets.
Meanwhile, fears that the UK government could take stricter lockdown measures to curb the rapid pace of growth in COVID-19 cases and persistent Brexit uncertainties kept the GBP bulls on the defensive. The combination of factors dragged the GBP/JPY cross further below the 135.00 mark, to its lowest level since September 28.
However, oversold conditions on intraday charts prompted traders to lighten their bearish positions and assisted the GBP/JPY cross to stage a modest bounce. That said, any further recovery might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly amid absent relevant market moving economic releases.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.