GBP/JPY retreats under 153.00 on coronavirus, Brexit concerns
- GBP/JPY fades bounce off 13-day low, prints three-day downtrend.
- UK registers highest covid infections since January, PM Johnson demands EU repairs of NI protocol.
- Tokyo reports highest cases since May, pushes Japanese authorities to hold Olympics without spectators.
- Risk catalysts remain on the driver’s seat amid a lack of major data/events.
GBP/JPY drops to 152.64, down 0.10% intraday, amid the initial Asian session on Thursday. The cross-currency pair bears the burden of the Brexit and the coronavirus (COVID-19) woes in the UK, as well as Japan, to portray the bears’ dominance around two week low.
UK PM Boris Johnson strongly responded to the European Commission Vice President Maroš Šefčovič’s comments signaling legal proceedings over Britain if it violates the Northern Ireland (NI) protocol. In doing so, the UK leader Johnson said, per the Daily Mail, “There remain very serious problems in what I believe is the misapplication, the excessively legally purist application of that deal, of that protocol, and what we're hoping for is some progress from the European Commission, some repairs that I think they should make to the way that this is working.”
On the other hand, the UK registered the highest covid cases since late January, above the 32,000 mark, while the death toll eased. Alternatively, “Japan is likely to stage the Olympics without spectators at venues in Tokyo due to a spike in coronavirus cases, a senior government official said Wednesday,” said Kyodo News. The same probes the UK PM Johnson’s unlock plans and pushes the World Health Organization (WHO) official Mike Ryan to warn, per The Guardian, of ‘epidemiological stupidity’ of early Covid reopening.
It’s worth noting that the FOMC minutes seemed to have tamed the market fears for now after the statement refrained from any surprises backing the Fed’s early rate hike. Additionally favoring the mood could be the upbeat US data and hopes of a faster recovery in the West.
Amid these plays, S&P 500 Futures print mild gains and the US 10-year Treasury yields stay near the lowest since late February.
Looking forward, GBP/JPY traders will have to pay attention to the covid and Brexit headlines for fresh impulse amid a light calendar.
Technical analysis
100-DMA tests GBP/JPY bears around 152.20 but recovery moves will need to cross the 50-DMA level surrounding 154.00 to recall the buyers.
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.
