GBP/JPY portrays market's anxiety around 153.50
- GBP/JPY remains pressured after stepping back from four-day top.
- UK-EU delays sausage war but financial services’ deal stays dead, covid cases remain high as Britain plans third booster dose.
- BOE’s Bailey steps back on bullish inflation outlook.
- German-British talks, US NFP eyed for fresh impulse, virus updates are important as well.
GBP/JPY recovers from intraday low to 153.55 but fails to overcome the weekly loss as markets in Tokyo open for Friday’s trading. The pair showcases the subdued market sentiment amid the cautious mood of traders ahead of the key data/events, German Chancellor Angela Merkel’s UK visit and the US Nonfarm Payrolls (NFP).
That said, the quote reversed from a three-day top the previous day as the UK refreshed the yearly record of the coronavirus (COVID-19) cases with 27,989 new infections and 22 virus-led deaths. Also weighing on the quote could be the Bank of England (BOE) Governor Andrew Bailey’s comments suggesting the latest price pressure as “transitory” versus the previous bullish bias. Not only in the UK but the covid woes in Japan and the rest of the Asia-Pacific region also keep GBP/JPY in check of late.
Furthermore, UK Chancellor Rishi Sunak’s admission, per Reuters, that his hope for the UK and EU to strike a deal on regulatory equivalence “has not happened”, also weighed on the quote.
On the contrary, the British government’s plan to rollout third covid booster dose and the extension of three months to the likely sausage war between the European Union (EU) and the UK restricted the quote’s further downside. Additionally, chatters that the UK and Japan will be able to overcome the Delta variant woes, backed by stronger inoculation also challenge the GBP/JPY downside.
Above all, the market’s cautious mood ahead of the US jobs report for June and the UK-German meet keeps the pair prices in check.
The US data may help the risk appetite to improve, likely offering an uptick to the GBP/JPY prices. However, German Chancellor Merkel may not leave behind her strong demands before easing the bloc’s rules for the British travelers and hence can keep the quote pressured. In case of a surprise, for which UK PM Johnson is famous, the pair may print the second weekly gain in the last five.
Technical analysis
GBP/JPY remains lackluster between a falling trend line from late May and a two-week-old rising support line, respectively 154.90 and 153.00. Inside the bigger area, 50-DMA offers an intermediate halt around 153.80.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
