- GBP/JPY looks to post solid gains on Friday after bouncing from below 152.00 but failed to hold above 153.00.
- The 200 DMA at 153.20 plus declining risk appetite during US hours amid geopolitical concerns weighed on the pair.
The rise of GBP/JPY Friday has eased a bit from the start of US trade, with the pair failing in an early session attempt to break back above its 200-day moving average at 153.20 and finally falling below the level of 153.00. The weakness of the US session coincided with a drop in risk appetite (US stocks erased previous gains and are now in the red across the board).
Market commentators cited a decline in optimism prompted by an earlier comment by Russian President Vladimir Putin, who noted “positive aspects” in talks with Ukraine after Ukraine’s foreign minister said “zero” had been achieved. progress in Thursday’s talks. Western nations also announced new measures to punish Russia for its invasion of Ukraine and updates on the ground suggest heavy fighting continues, with Russia accused of committing multiple war crimes and civilians still struggling to escape some besieged cities.
GBP/JPY still looks poised to end the day around 0.6% higher, having rebounded from Asian session lows below 152.00, partly thanks to a UK GDP growth update of January much stronger than expected. But it looks like uncertainties regarding the war in Ukraine will continue to weigh on sentiment, suggesting a break above the 200 day moving average may be difficult next week.
Aside from geopolitics, GBP/JPY traders will also want to keep an eye on UK employment data on Tuesday, followed by a BoE rate decision on Thursday and a BoJ rate decision on Friday. Traders are signaling downside risks to sterling heading into next week’s meeting, with risks that the bank may not raise rates by 25bps as markets currently expect, or offer a much more cautious tone in its policy statement given the uncertainties related to Ukraine.
Additional technical levels
Source: Fx Street
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