- GBP / JPY witnessed strong selling after the Bank of England announced its policy decision.
- The lack of an aggressive tilt disappointed investors and weighed on the British pound.
- The JPY benefited from a modest weakness in the USD and contributed to the selling bias.
The British pound weakened across the board after the Bank of England announced its policy decision and dragged the crossover GBP/JPY to new session lows, around 154.00 in the last hour.
Unsurprisingly, the Bank of England maintained the status quo and decided to leave its monetary policy setting unchanged at its meeting in late June. However, the lack of an aggressive lean seemed to have disappointed market participants. This, coupled with concerns about the EU-UK showdown over the Northern Ireland protocol and a jump in UK Delta Plus covid cases weighed on the British pound.
On the other hand, the Japanese yen benefited from a softer tone around the US dollar. This, in turn, was seen as another factor that put some downward pressure on the GBP / JPY cross, which, for now, appears to have broken the three-day winning streak and stalled this week’s strong rebound from 151.30 area, or the lowest level since May 7, touched the first day of the week.
Meanwhile, underlying bullish sentiment in financial markets could keep strong safe-haven JPY gains in check. Aside from this, the optimistic outlook for the UK’s economic recovery from the pandemic, bolstered by PMI figures on Wednesday June, could prevent investors from making aggressive bets and help limit further losses for the GBP / JPY cross. , at least for now.
Therefore, any subsequent decline below the 154.00 level could still be seen as a buying opportunity and remain capped near the 153.55-50 region. The aforementioned support should now act as a key pivot point, which if decisively broken will change the bias in favor of bearish traders. The GBP / JPY cross could prolong its recent corrective pullback from 156.00, or multi-year highs.
Technical levels
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