- GBP/JPY’s difficult run continued as of late on Monday, with the pair extending recent losses towards the 151.00 level.
- There are no signs of a near-term de-escalation of the Russo-Ukrainian war, suggesting that more risk-averse conditions ahead are a reasonable bet.
- GBP/JPY bears are now likely to target a test of 149.00, a key support area, in the coming weeks.
The pair’s difficult streak GBP/JPY continued late on Monday, with the pair extending recent losses towards the 151.00 level as currency investors sold risk-sensitive British Pounds for the safe-haven Yen as choppy and loose market conditions continued. of risks. At current levels of 151.20, the pair is down 0.4% on Monday, taking its losses from last week’s highs above 155.00 to more than 2.5%. With no signs of near-term de-escalation from the Russo-Ukrainian war, and subsequently no respite from the prospect of the ongoing “commodity crisis,” more risk-averse conditions are expected ahead that looks like a gamble. reasonable.
GBP/JPY bears are now likely to target a test of 149.00, a key support area, in the coming weeks. 149.00 has acted as a floor for price action since last July, when the pair hit 148.50. It is still too early to call for a significant break below this key support area; in fact, at current levels, the pair is still trading around 1.5% above these levels. However, if the impact of the Russo-Ukrainian war and related Western sanctions turns out as bad as feared (i.e. a stagflationary European recession rolling back BoE/ECB tightening plans) and the breakout in the coming weeks /months is definitely cards
If GBP/JPY were to drop below 158.00, it would have broken through all major support levels to around 145.00. Of course, it would be a major decision (approximately 4.0% drop from current levels). In the more immediate future, in addition to geopolitics, traders will have to watch other risks, the most important of which will be next week’s BoE and BoJ policy meetings.
Additional technical levels
Source: Fx Street
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