- A combination of factors assisted GBP/JPY to prolong its recent strong bounce from the 149.00 mark.
- The optimism over the gradual reopening of the UK economy continued benefitting the British pound.
- BoJ’s outlook for inflation, risk-on mood undermined the safe-haven JPY and remained supportive.
The GBP/JPY cross continued scaling higher through the first half of the European session and climbed further beyond the 152.00 mark, or over three-week tops in the last hour.
Following the previous day’s subdued/rangebound price action, the cross regained traction on Thursday and built on its recent bounce from the 149.00 mark, or near two-month lows touched last week. The British pound remained well supported by the gradual reopening of the UK economy. Bulls seemed rather unaffected by political noise amid controversy over funding arrangement for the UK Prime Minister Boris Johnson’s official apartment.
On the other hand, the Japanese yen was weighed down by concerns that the recent surge in COVID-19 cases could hinder Japan’s fragile economic recovery. Apart from this, the BoJ’s forecast that inflation will not reach the 2% target through early 2023 and the generally positive risk tone further acted as a headwind for the safe-haven JPY. This, in turn, was seen as another factor that provided a goodish lift to the GBP/JPY cross.
In the absence of any major market-moving economic releases, Thursday’s positive move for the fifth straight day could also be attributed to some technical buying above the 151.25 resistance zone. A subsequent move and acceptance above the 152.00 mark might have already set the stage for additional gains. Hence, some follow-through strength towards the 153.00 mark, en-route multi-year tops near the 153.40 area, looks a distinct possibility.
