Categories: Markets

GBP / JPY cuts a portion of intraday gains, hesitant before 151.00

GBP / JPY cuts a portion of intraday gains, hesitant before 151.00
  • GBP / JPY regained positive traction on Wednesday and gradually retreated closer to the overnight high.
  • A generally positive risk tone undermined the safe-haven Japanese yen and continued to support the move.
  • A modest USD strength acted as a headwind for the GBP and limited any further gains for the cross.

The crossing GBP/JPY it maintained its offered tone during the middle of the European session, although it has fallen a few pips from the daily highs. The cross was last seen trading around the 150.70-75 region, up nearly 0.20% on the day.

Despite the sharp pullback the day before from multi-day highs, the GBP / JPY cross managed to defend the key psychological 150.00 level and regained positive traction on Wednesday. The rally was solely sponsored by the emergence of some new selling around the Japanese safe-haven yen, although a moderate price action around the British pound limited further gains.

Concerns about the fast-spreading Delta variant abated after China said it had halted the community spread of COVID-19. In addition to this, the United States Food and Drug Administration (FDA) granted full approval to the Pfizer / BioNTech COVID-19 vaccine. The development raised hopes that vaccines in the US can be accelerated and restored investor confidence.

This was evident by a generally positive tone in equity markets, which undermined demand for traditional safe-haven currencies, including the JPY, and extended some support to the GBP / JPY cross. The bulls, however, struggled to capitalize on the move and the upside remained capped below the swing highs overnight around the 151.00 round level.

A modest strength in the US dollar acted as a headwind for the British pound and did not provide any additional boost to the GBP / JPY cross. This makes it prudent to wait for some solid follow-up buying before traders start positioning for an extension of the recent bounce from near 149.00, or the month-long lows touched last Friday.

Technical levels

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