GBP/JPY flirts with multi-week low amid risk-off, holds above mid-154.00s

A combination of factors dragged GBP/JPY to over a three-week low on Friday.
The risk-off impulse benefitted the safe-haven JPY and exerted heave pressure.
The UK political drama weighed on the GBP and contributed to the selling bias.

Haresh Menghani FXStreet

The GBP/JPY cross maintained its heavily offered tone and dropped to over a three-week low, around the 154.45 region during the Asian session.

The cross extended its recent sharp pullback from the vicinity of the 157.70 area, or the monthly top and continued losing ground for the fourth successive session on Friday. This also marked the seventh day of a negative move in the previous eight and was sponsored by reviving demand for the safe-haven Japanese yen.

Investors turned risk-averse amid concerns that a more aggressive policy tightening by the Fed would dent the earnings outlook for companies. This was evident from the recent corrective slide in the equity markets, which forced investors to take refuge in traditional safe-haven currencies and benefitted the JPY.

On the other hand, growing demands for UK Prime Minister Boris Johnson's resignation over a series of lockdown parties in Downing Street acted as a headwind for the British pound. This was seen as another factor that exerted additional pressure on the GBP/JPY cross and dragged spot prices to the lowest level since December 29.

That said, increasing bets for additional rate hikes by the Bank of England extended some support to the sterling. This, along with the announcement that COVID-19 restrictions in the UK would be lifted next week, helped limit any further losses and assisted the GBP/JPY cross to show some resilience below mid-154.00s, at least for now.

That said, the lack of any strong follow-through buying warrants some caution before positioning for any meaningful recovery for the GBP/JPY cross. Market participants now look forward to the UK monthly Retail Sales data for a fresh impetus. Apart from this, the broader market risk sentiment will be looked upon for some trading opportunities.

Technical levels to watch

GBP/JPY

Overview
Today last price	154.71
Today Daily Change	-0.47
Today Daily Change %	-0.30
Today daily open	155.18

Trends
Daily SMA20	155.91
Daily SMA50	153.39
Daily SMA100	153.33
Daily SMA200	153.03

Levels
Previous Daily High	156.07
Previous Daily Low	155.15
Previous Weekly High	157.71
Previous Weekly Low	155.46
Previous Monthly High	156.02
Previous Monthly Low	148.98
Daily Fibonacci 38.2%	155.5
Daily Fibonacci 61.8%	155.72
Daily Pivot Point S1	154.87
Daily Pivot Point S2	154.55
Daily Pivot Point S3	153.95
Daily Pivot Point R1	155.79
Daily Pivot Point R2	156.39
Daily Pivot Point R3	156.71

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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