- GBP/JPY faced rejection near the 151.00 mark and retreated nearly 100 pips from multi-day tops.
- Worries about the fast-spreading Delta variant benefitted the safe-haven JPY and exerted pressure.
- The sharp pullback suggests that the recent bounce from one-month lows might have lost steam.
The GBP/JPY cross refreshed daily lows heading into the North American session, with bears now eyeing a sustained break below the key 150.00 psychological mark.
The cross built on the previous day's strong positive move and witnessed some follow-through buying through the first half of the trading action on Tuesday. The momentum pushed the GBP/JPY cross to multi-day tops, though bulls struggled to capitalize on the move and faced rejection near the 151.00 mark.
The markets remain worried about the fast-spreading Delta variant of the coronavirus and its impact on the global economic recovery. This, in turn, acted as a tailwind for traditional safe-haven currencies, including the Japanese yen, which was seen as a key factor that prompted fresh selling around the GBP/JPY cross.
Meanwhile, reviving safe-haven demand provided a modest lift to the US dollar and exerted pressure on the British pound. This further contributed to the GBP/JPY pair's intraday pullback of nearly 100 pips. With the latest leg down, the cross has now stalled its recent bounce from one-month lows touched last Friday.
In the absence of any major market-moving economic releases, developments surrounding the coronavirus saga will continue to play a key role in driving the broader market risk sentiment. This will influence demand for the safe-haven JPY and produce some short-term trading opportunities around the GBP/JPY cross.
Technical levels to watch
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