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GBP/JPY advances to 161.00, ignoring rising geopolitical risks

  • GBP/JPY advanced on Monday along with other risk-sensitive currency pairs as US stocks rise.
  • Dovish comments from the BoE and recent negative developments in the Russia-Ukraine war have failed to dent risk appetite, with GBP/JPY now at 161.00.

Dovish comment from BoE Deputy Governor Jon Cunliffe, who said a drop in demand through household consumption and business investment as a result of the Russo-Ukrainian war will be larger than expected, failed to affect the cross. GBP/JPY on Monday. The cross last traded 0.2% higher around the 161.00 level and earlier came close to matching last Wednesday’s high of 161.35. Cunliffe was the only one to dissent against a 25bp rate hike at the last BoE meeting, so market participants do not seem surprised that he is taking a more dovish view of the economy.

Global equities are performing well on Monday, with US stocks erasing pre-open indecision and now firmly in the lead, despite concerns over recent geopolitical developments in the Russo-Ukrainian war and this is lifting the risk sensitive GBP/JPY cross. The withdrawal of Russian troops in the north has revealed a mountain of evidence of possible war crimes and, as a result, international pressure is mounting on the EU to implement a ban on imports of Russian energy. But risk assets are immune for now and if this continues to be the case then the GBP/JPY pair could remain supported and maybe even move towards the 162.00 level.

Technical levels

Source: Fx Street

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