GBP/JPY pares suspected JPY intervention-inspired losses; stays pressured below 213.00
- GBP/JPY attracts heavy intraday selling as the JPY rallies amid suspected intervention.
- The optimism over a US-Iran peace deal caps any further upside for the safe-haven JPY.
- The BoE’s hawkish signal continues to underpin the GBP and limits losses for spot prices.
The GBP/JPY cross retreated nearly 350-pips from the weekly top, around the 214.20-214.25 region set earlier this Wednesday, amid another suspected government intervention to prop up the Japanese Yen (JPY). Spot prices, however, rebound swiftly from the 210.75 area and trade around the 212.65-212.70 region during the early part of the European session.
Data released by the Bank of Japan (BoJ) last week showed that the Ministry of Finance (MOF) spent around ¥5.48 trillion (USD 35 billion) to support the JPY after it breached the 160.00 psychological mark vs the US Dollar (USD). Traders remain on edge amid expectations that Japanese authorities will step back into the market to prop up the domestic currency. This turned out to be a key factor behind the GBP/JPY pair's sharp intraday decline.
The JPY bulls, however, refrain from placing aggressive bets in the absence of an official confirmation on interventions. Apart from this, the optimism over a potential US-Iran peace deal undermines the JPY's relative safe-haven status against its British counterpart. Furthermore, the Bank of England's (BoE) hawkish signal, that rate hikes could be appropriate if inflation remains persistent, further limits the downside for the GBP/JPY cross.
Even from a technical perspective, spot prices have been showing resilience below the 100-day Simple Moving Average (SMA). This, in turn, makes it prudent to wait for strong follow-through selling before confirming that the GBP/JPY cross has topped out and positioning for an extension of the recent sharp pullback from the 216.60 area, or the highest level since January 2008, set last week.
(The story was corrected on May 6 at 08:43 GMT to say that the US-Iran peace deal undermines the safe-haven JPY, not underpins.)
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.29% | -0.35% | -0.88% | -0.18% | -0.74% | -0.99% | -0.18% | |
| EUR | 0.29% | -0.07% | -0.57% | 0.12% | -0.45% | -0.73% | 0.11% | |
| GBP | 0.35% | 0.07% | -0.51% | 0.20% | -0.38% | -0.65% | 0.21% | |
| JPY | 0.88% | 0.57% | 0.51% | 0.69% | 0.12% | -0.14% | 0.74% | |
| CAD | 0.18% | -0.12% | -0.20% | -0.69% | -0.56% | -0.82% | 0.02% | |
| AUD | 0.74% | 0.45% | 0.38% | -0.12% | 0.56% | -0.26% | 0.59% | |
| NZD | 0.99% | 0.73% | 0.65% | 0.14% | 0.82% | 0.26% | 0.85% | |
| CHF | 0.18% | -0.11% | -0.21% | -0.74% | -0.02% | -0.59% | -0.85% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
