GBP/JPY remains depressed below 155.00 mark

The GBP/JPY cross edged lower during the early European session and dropped to fresh daily lows, around the 154.80 region.

The cross struggled to capitalize on the previous day's bounce from one-and-half-week lows, instead faced rejection near the key 155.00 psychological mark on Tuesday. This marked the third consecutive day of a negative move and was sponsored by the emergence of some fresh selling around the British pound.

Doubts over the UK government's plan to reopen the economy on June 21 in light of the spread of the so-called Delta variant acted as a headwind for the sterling. Apart from this, indications that Britain's relationship with the European Union has been souring exerted some downward pressure on the GBP/JPY cross.

In a further escalation of a dispute over the Northern Ireland protocol, the EU is reportedly considering tougher retaliatory measures if the U.K. government fails to implement its post-Brexit obligations. That said, an offered tone surrounding the Japanese yen helped limit any further losses for the GBP/JPY cross.

The JPY was weighed down by a goodish pickup in the US dollar demand and seemed rather unaffected by upbeat Japanese macro data. The final version of the GDP report showed that the economy contracted at a slightly slower than estimated pace, by 1.0% during the first quarter of 2021 and 3.9% annualized pace.

It will now be interesting to see if the GBP/JPY cross is able to find any support at lower levels amid absent relevant market moving economic releases from the UK. The overnight swing lows, around the 154.55 region should act as a key pivotal point, below which the cross is likely to extend its retracement slide from multi-year tops.

Technical levels to watch