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GBP/JPY recovers a few pips from multi-month lows but remains bearish near 158.00

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GBP/JPY recovers a few pips from multi-month lows but remains bearish near 158.00
  • GBP/JPY witnessed strong selling for the third day in a row and plunged to a multi-month low.
  • The gloomy outlook for the UK economy and the UK debt market selling weigh on the pound sterling.
  • The global flight to safety lifts the JPY and further contributes to the sharp intraday decline.

The crossing GBP/JPY remains under intense selling pressure for the third day in a row and slumps to a four-month low around the mid-157.00 mark during the mid-European session.

The British pound continues its relative underperformance amid the worsening outlook for the UK economy, which, in turn, is seen weighing on the GBP/JPY cross. Fears were fueled by the disappointing release of PMI data, which showed that the decline in UK companies deepened in September. Furthermore, a survey by the Confederation of British Industry revealed that the retail balance fell to -20% in September from +37% in August.

The selling bias around the pound is accelerating after the new British government unveiled a sweeping economic plan in a bid to boost growth. Finance Minister Kwasi Kwarteng announced reductions in the top rate of income tax, social security and stamp duty of £45bn. The stimulus will be financed largely through the sale of gilts, which has raised concerns about the cost of the government’s borrowing plans and triggered a strong sell-off in the UK government bond market.

The contagion effect is taking its toll on global risk sentiment, manifesting itself in a sea of ​​red in equity markets. This comes a day after Japanese authorities intervened in the market for the first time since 1998 to stem the rapid decline of the national currency, boosting the yen’s relative safe-haven status against its British counterpart. This was another factor that contributed to the heavily bid tone surrounding the GBP/JPY cross.

However, oversold conditions on intraday charts prevent traders from placing further bearish bets and help the pair climb back above 158.00. However, the GBP/JPY cross remains on track to end the day lower and post losses for the second week in a row. This could have set the stage for a further decline towards May’s monthly low around the 155.60 area.

Technical levels

GBP/JPY

Panorama
Last Price Today 158.24
Today’s Daily Change -2.11
Today’s Daily Change % -1.32
Today’s Daily Opening 160.35
Trends
20 Daily SMA 163.48
50 Daily SMA 163.19
100 Daily SMA 163.07
200 Daily SMA 160.29
levels
Previous Daily High 164.44
Previous Daily Minimum 159.12
Previous Maximum Weekly 167.22
Previous Weekly Minimum 162.75
Monthly Prior Maximum 163.99
Previous Monthly Minimum 159.45
Daily Fibonacci 38.2% 161.15
Daily Fibonacci 61.8% 162.41
Daily Pivot Point S1 158.16
Daily Pivot Point S2 155.98
Daily Pivot Point S3 152.84
Daily Pivot Point R1 163.48
Daily Pivot Point R2 166.62
Daily Pivot Point R3 168.8

Source: Fx Street

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