- GBP/JPY is lower as the pound sinks towards daily lows vs the US dollar.
- Traders are treading carefully around the UK’s coronavirus and Brexit risks.
At the time of writing, GBP/JPY is a touch lower by 0.3% at 153.05 and is trading between a low of 152.61 and a high of 153.57 as the British currency drops towards levels to make for the worst month since September.
The US dollar has been on the front foot for the most part since the Federal Reserve surprised with a hawkish hold at their last meeting around which has seen the pond pressured in recent times.
Sterling had otherwise been riding optimism in the UK’s vaccination and economic advances to near three-year highs.
However, the recent drop in the pound in the spot market has squeezed some of the speculative long positions out in the futures markets which is, however, still maintaining a net long position on the pound.
However, net GBP long positions did fall sharply from their strongest levels since March as investors tread water over uncertainty around the spread of the delta variant of the coronavirus in the nation.
The UK government has had to delay the final phase of reopening the economy and Prime Minister Boris Johnson announced at the start of the week that the remaining COVID-19 restrictions could be lifted on July 19.
A widely vaccinated population is ensuring that there are not as many hospitalization numbers or deaths this wave around which is likely supporting GBP to some extent as investors bet on a post covid nation and economic recovery.
Meanwhile, there are still some concerns over Brexit and N.Ireland.
Traders are on the lookout for an agreement that could be reached within the European Union in the coming 48 hours to avoid a ban on chilled meat product exports from Britain to Northern Ireland. The current grace period is due to end on Wednesday.
