GBP/JPY witnessed heavy selling for the second straight session on Wednesday.
A strong pickup in demand for the safe-haven JPY exerted pressure on the cross.
Weaker USD, stronger UK CPI print underpinned the GBP and helped limit losses.

The GBP/JPY cross dropped to near three-week lows, around the 150.85-80 region in the last hour, albeit quickly recovered few pips thereafter.

The cross extended the previous day’s dramatic pullback from the 152.85 area, or one-month tops and witnessed heavy selling for the second consecutive session on Wednesday. The downfall was exclusively sponsored by a strong pickup in demand for the safe-haven Japanese yen, though bulls showed some resilience below the 151.00 round-figure mark.

Investors remain worried about the fast-spreading Delta variant of the coronavirus and a global economic slowdown. The concerns were further fueled by disappointing Chinese macro data, which underscored recent signs of slackening economic momentum in the world’s second-largest economy. This, in turn, underpinned traditional safe-haven assets.

The JPY, however, trimmed a part of its intraday gains after the Bank of Japan Governor Haruhiko Kuroda showed readiness to further relax monetary policy if necessary. Apart from this, renewed US dollar weakness, along with hotter-than-expected UK CPI figures acted as a tailwind for the British pound and helped limit any further losses for the GBP/JPY cross.

Nevertheless, the overnight sustained break below important horizontal support near mid-151.00s favours bearish traders and supports prospects for a further near-term depreciating move. Hence, it remains to be seen if bulls are able to capitalize on the attempted recovery move or the GBP/JPY cross meets with some fresh supply at higher levels.

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