- GBP / JPY witnessed some aggressive selling and fell more than 100 pips from daily highs.
- The risks posed by the upcoming Scottish elections weighed heavily on the British pound.
- A generally softer risk tone benefited the safe-haven JPY and added to the selling bias.
The crossing GBP/JPY it was under intense selling pressure during the middle of the European session and fell to new daily lows, around 151.00 in the last hour.
The cross witnessed a dramatic intraday reversal from 152.00 and has now retraced a significant part of the positive move from the previous day. This marked the second day of a positive move in the previous three and dragged the GBP / JPY cross close to the lower end of a week-long trading range.
The risk posed by the upcoming Scottish elections overshadowed optimism about the reopening of the British economy and weighed on the British pound. Polls point to a supermajority of pro-independence parties, which could intensify pressure on British Prime Minister Boris Johnson to allow a second independence referendum in Scotland.
Aside from this, a sharp pullback in equity markets forced investors to take refuge in the traditional safe-haven Japanese yen. This was seen as another factor that put additional downward pressure on the GBP / JPY cross. However, the decline remains limited, as investors now seemed reluctant to place aggressive bets ahead of Thursday’s BoE meeting.
From a technical perspective, the repeated failures to find acceptance above 152.00 suggest that the recent bounce from 149.00 may have lost steam. Some follow-up weakness below 151.00 will reaffirm the negative bias and set the stage for the resumption of the corrective pullback from the three-year highs touched in early April.
Technical levels
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