In a risk-off atmosphere, the GBP/JPY accepts offers to refresh its weekly low.
Covid infections in the UK have risen to a six-month high, while Tokyo has seen the highest daily incidences since May 13.
Frost attacks the Northern Ireland protocol, and British fisheries warn of a disastrous EU-UK relationship after Brexit.
Virus updates and the British jobs data could provide some short-term guidance.
GBP/JPY is trading lower for the third day in a row, down 0.15 percent intraday around 152.15 at the start of Thursday’s Tokyo session. As a result, the cross-currency pair re-tests the weekly low amid gloomy markets and cautious mood ahead of the June UK employment numbers.
Although US Federal Reserve Chairman Jerome Powell dismissed the necessity for tapering and rate hikes, higher US Producer Price Index (PPI) readings keep reflation fears alive for the time being. The same factors weighed on US Treasury yields, giving the Japanese yen a safe bid (JPY).
The increasing coronavirus (COVID-19) situation in the UK and Japan is also causing GBP/JPY traders to flee for safety. For the first time since early January, the United Kingdom had more than 40,000 cases on Wednesday, while Tokyo had the highest daily infection rate in two months, with 1,149 cases.
It’s worth noting that the UK Brexit Minister’s blame of the Northern Ireland (NI) protocol for the recent increase in Irish commerce, as well as British fishing sector specialists’ warnings of additional EU-UK tensions, are both weighing on GBP/JPY values.
S&P 500 futures are down 0.20 percent, while the US 10-year Treasury yield is down 1.2 basis points (bps) to 1.344 percent as of press time.
Moving on, the UK’s June month Claimant Count Change, which was previously -92.6K, and the Unemployment Rate for the three months to May, which is predicted to stay at 4.7 percent, will be key for GBP/JPY traders to keep an eye on for new impulse. In addition, reflationary concerns, Treasury yields, and covid updates are other factors to consider.
A sustained break of the 100-SMA, around 152.45, also drives GBP/JPY sellers to the monthly low near 150.65, as well as a clear U-turn from the 153.20-25 resistance confluence, which includes the 21-DMA and a three-week-old falling trend line./n
