GBP/JPY fades the strongest rebound in a month below 156.00 on mixed concerns
- GBP/JPY steps back from weekly top, probes the previous day’s positive performance.
- Market sentiment dwindles amid quiet session, Fedspeak, covid are the key catalysts.
- Japanese stocks open higher but S&P 500 Futures struggle, US Treasury yields stay quiet.
- Risk catalysts become crucial for fresh impulse amid a light calendar.
GBP/JPY eases to 153.50, down 0.12% intraday, in the latest pullback moves amid the initial hour of Tokyo open on Tuesday. It’s worth noting that the lack of major catalysts and cautious sentiment ahead of the day’s, as well as the week’s, key data/events probe the bulls after posting the heaviest recovery moves since late May.
Although a majority of the Fed policymakers tried to tame the tapering and rate hike concerns, indecision among the US central bank board members couldn’t be ruled out. This joins the escalating inflation pressure from strong data and hopes of more stimulus to keep traders divided.
Additionally, fears of the covid’s Delta variant and criticism over Japan’s holding of Olympics join the Brexit woes to weigh on the quote. The UK and Japan both suffer from the virus resurgence wherein Britain recently pushed back the unlock date. Furthermore, tussles concerning the Northern Ireland (NI) border become a tough nut to crack for the British and the European Brexit negotiators of late. On the contrary, the UK is up for signing the trans-Pacific trade deal.
Even so, Japan’s Nikkei jumps over 2.0% and the US S&P 500 Futures also print mild gains. However, the US 10-year Treasury yields struggle to keep the previous day’s recovery from the four-month low.
Moving on, a lack of major data/events can keep troubling GBP/JPY traders, which in turn helps intraday sellers amid UK’s covid and Brexit woes. It’s worth noting that Wednesday’s preliminary PMIs for June and Thursday’s BOE become the week’s key events while Fed Chairman Jerome Powell’s testimony will be important to watch for today’s moves.
Technical analysis
GBP/JPY bulls need a clear break of 154.85 to defy the downside risk to retest 100-day SMA near 151.25.