- GBP/JPY is falling for the third day in a row.
- The escalation of the conflict between Russia and Ukraine impacted the markets, which have recovered but remain cautious.
- The modest strength of the USD weighed on the GBP, contributing to the cross’s selling bias.
GBP/JPY eroded some of Thursday’s second-half bounce and fell as low as 154.15 on Friday, marking a daily low.
The Nidium cross on Friday had reached as high as 154.80, with most currency pairs making correction rallies, following the shock of Russia’s invasion of Ukraine.
The tone of caution resulting from Russia’s invasion of Ukraine continues to generate volatility and alters the markets. In the latest developments, reports indicated that Russian forces have entered the Obolon district of Kiev. According to the Kyiv Independent, the Ukrainian army is fighting Russian troops and there are also mentions of Russian aerial missiles seen in northern Kiev. Adding to this, calls to disconnect Russia from SWIFT kept investors on edge.
If the negative climate intensifies, the demand for the yen could skyrocket. Should the GBP/JPY drop below 154.00, you will have a scenario to go test the 200 day moving average support.
GBP/JPY is on track to end the week looking set to post heavy weekly losses and remains at the mercy of geopolitical headlines. Therefore, the focus will be on the outcome of the NATO summit, which could influence market risk sentiment.
Technical levels
Source: Fx Street
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