GBP/JPY: On the back foot around 152.00 amid downbeat sentiment
- GBP/JPY stays depressed for a third consecutive day, teases early month lows.
- Brexit, covid woes favor bears, preliminary readings of Japan’s Q2 GDP eyed.
GBP/JPY reverses the bounce off one-week low, teasing the 152.00 threshold, during Monday’s Asian session.
In doing so, the cross-currency pair portrays a mildly offbeat mood in the market as the pair bears await Japan’s first readings of Q2 GDP, expected +0.7% annualized versus -3.9% prior.
Other than the pre-data caution, covid woes and Brexit jitters also weigh on the GBP/JPY prices. Although the UK’s latest virus numbers are a bit promising, Japan’s COVID-19 conditions aren’t good. Additionally, fears that the EU-UK deadlock over Brexit will extend for months exert additional downside pressure on the quote.
As per the latest British numbers, 26,750 new infections were reported on Sunday versus 29,520 the previous day whereas death tolls eased from 93 to 61. On the other hand, “The number of coronavirus patients with severe symptoms across Japan totaled 1,563 as of Saturday, up 42 from the previous day and hitting a record high for the third straight day, the health ministry said Sunday,” per Japan’s Kyodo News.
Elsewhere, the UK Express quotes Director of UK in a Changing Europe, Professor Anand Menon while saying, “Hostility from both sides was expected to continue for two key reasons. One reason being the issues surrounding Northern Ireland and another being the EU's determination to see Brexit fail.”
Amid these plays, S&P 500 Futures drop 0.10% whereas the US 10-year Treasury yields also drop 1.2 basis points after declining the most since July 06 on Friday.
Looking forward, upbeat expectations from Japan GDP may disappoint GBP/JPY buyers, if any, as virus resurgence in Japan challenges the economic outlook for the Asian major even as it held Olympics and Paralympics.
Technical analysis
In addition to failures in crossing the double tops around 153.50, a sustained trading below 50-DMA level of 152.90 and a clear downside break of an ascending support line from July 20, near 153.85, keeps GBP/JPY bears hopeful to aim for the monthly bottom near 151.15.