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GBP/JPY eases as market consolidates

by Jonathan Adams
GBP JPY

Concerns that the UK’s travel guidance will remain cautious dragged GBP/JPY

GBP/JPY struggles to keep the upside momentum near a 36-month high, recently easing to 153.25, amid the initial hour of Tuesday’s Tokyo open. The pair climbed to the fresh high since April 2018 before a few minutes but consolidation in the market sentiment and downbeat news from the UK seem to have weighed down the quote.

While upbeat catalyst from the US favoured the mood on Monday, fears that the UK’s travel guidance will remain cautious dragged GBP/JPY the previous day. Also on the risk-negative side could be the British medicine authority, Medicines and Healthcare products Regulatory Agency’s (MHRA) consideration of a proposal to restrict the use of the Oxford-AstraZeneca covid vaccine in younger people, per Channel 4 news, likely challenges the bulls.

UK PM Boris Johnson announced that the country will be moving ahead to stage of its reopening plan on 12 April, meaning that most businesses will be permitted to reopen as long as safety and social distancing guidelines are followed. Moreover, the UK government announced that it will adopt a new traffic light system for international travel and will also make two free tests available to each member of the public every week.

Also on the risk-negative side could be the comments from the Bank of Japan (BOJ) suggesting economic hardships in case of the rate cuts as well as mixed data from Japan.

Japan’s February Labor Cash Earnings recovered from -0.8% prior and -1.5% market consensus of -0.2%. However, Overall Household Spending fell below -2.1% expected and -6.1% previous readings to -6.6% during the stated month.

It’s worth mentioning that the S&P 500 Futures dwindle around record top whereas the US 10-year Treasury yield eases 2.3 basis points to 1.69%. Further, Japan’s Nikkei 225 noted mild losses of 0.10%.

Given the lack of major data/events from neither Japan nor the UK, GBP/JPY traders will have to keep their eyes on the risk catalysts for fresh impulse.



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