GBP/JPY refreshes monthly low under 132.00 amid mixed sentiment

GBP/JPY declines to 131.88, intraday low of 131.77, during the Asian session on Monday. The pair recently refreshed the monthly bottom while bearing the burden of the market’s risk-off mood. However, likely positives from the UK seem to have confined the pair’s further downside.

Among the latest factors, hopes that British Chancellor Rishi Sunak will announce a cut in the Value Added Tax (VAT) to combat the coronavirus (COVID-19) gain major attention. Also supporting the optimism could be the expectation that the UK PM will rule out the two-meter rule.

On the contrary, the weekend attacks in the southern English town seem to weigh on the pair. Additionally, the fears of the virus wave 2.0 and the US-China tussle offer extra downside pressure on the pair.

While portraying the risk-tone sentiment, US 10-year Treasury yields remain sluggish near 0.70% whereas Japan’s Nikkei 225 drops 0.30% to 22,415 as we write. Furthermore, the US stocks seem to recovery the early-day losses while taking US President Donald Trump’s refrain from levying sanctions on Chinese diplomats involved in the Xinjiang case as the major risk-positive event.

Moving on, the UK’s CBI Industrial Trends Survey data for May, expected -59 versus -62 prior, could offer nearby direction to the pair. However, the market’s major attention will be on the qualitative headlines for fresh impulse.

Technical analysis

A break of the three-month-old support line, now resistance, drags the quote towards May 22 low of 130.68. However, 130.00 might question the pair’s further weakness. On the upside, the support-turned-resistance line, at 132.33 now, followed by a 50-day SMA level of 133.45, could challenge the buyers during the pair’s pullback moves.