GBP/JPY retests its daily bottom and declines again around mid-157.00s in a threat environment.

Market Analytics and Considerations

Key Notes

• On Today, GBP/JPY experienced significant sale and has since fallen farther out of its 3 peak.
• Concerns of a downturn increased consumption for the protected JPY and put some downturn on its price.
• The GBP is supported by the likelihood of further BoE rate increases, which should prevent further depreciation.

The GBP/JPY crossing continues to experience strong selloff on Thursday, extending the preceding day’s retracement drop from the 161.50 zone, or a 3 top. Spot prices make a new daily bottom before the European start and break a 3 unbeaten run by dropping back closer to mid-157.00s.

Ahead-looking downturn prospects drive up prices for the safe-haven Japanese Yen and exert pressure on the GBP/JPY cross as traders evaluate the Bank of Japan’s (BoJ) centrist policy announcement from Wednesday. Markets are still concerned about the possible negative effects of the worst COVID-19 outbreak to date in China. Aside from this, concerns about a wider global economic recession have been heightened by the lengthy Russia-Ukraine conflict.

The worries were stoked by Wednesday’s poorer US macro figures, which revealed that industrial production dropped by the greatest amount in almost 2 years and retail sales in December plummeted by the largest amount in a year. The JPY increases as a result of traders being compelled to look for safety in conventional backed securities. In addition, a slight reduction in the value of the British Pound contributes to the heavily marketed air surrounding the GBP/JPY duo.

For ambitious pessimistic investors, the aforesaid mixed fundamental background justifies some prudence in the absence of any pertinent market-moving economic reports from the UK. Hence, it will be wise to hold off on planning for any additional drop in the GBP/JPY duo until there is amount of potential selling.

Technical Levels