- GBP / JPY extends the rebound on Wednesday, although it is struggling to hold above 150.00.
- Rise in yields and improvement in stocks, pushed JPY down.
The GBP / JPY cross climbed to 150.13 in the European session, marking a two-day high, driven by the yen’s pullback throughout the market. Then the cross showed difficulties in holding above 150.00 and fell back to 149.65.
On Wednesday, the cross attracted new purchases at the 149.30-25 zone, from where it gained momentum to extend the recovery. On Tuesday it had fallen to 148.45, the lowest level since early March. The sharp decline occurred in a context of risk aversion as a result of fears over the economic impact of the delta variant of the coronavirus.
In turn, the pound is one of the most affected by the fall in the stock markets. Added to the above are the disagreements between the European Union and the United Kingdom per the Northern Ireland protocol. The UK’s chief Brexit negotiator David Frost said on Monday that the protocol is not sustainable in its current form and that all options remain on the table to solve the problem. Frost will release the government’s proposals for post-Brexit deals for Northern Ireland on Wednesday. With regard to COVID-19, in the UK they continue to rise by more than 50,000 a day and hundreds of thousands of Britons are asked to self-isolate for 10 days.
With no data ahead on Wednesday, the focus of traders not to emerge news, will be on what happens with the equity markets and the Treasury bond market.