GBP/JPY trades in a three-day slump after bouncing off a 13-day low.
Since January, the UK has seen the largest number of covid infections, prompting Prime Minister Johnson to demand that the EU restore the NI procedure.
Tokyo reported the largest number of cases since May, prompting calls for the Olympics to be held without spectators.
Despite a dearth of important data/events, risk catalysts remain in control.
During the first Asian session on Thursday, the GBP/JPY fell to 152.64, down 0.10 percent intraday. The cross-currency pair is weighed down by Brexit and the coronavirus (COVID-19) outbreaks in the UK and Japan, putting the bears’ dominance at a two-week low.
UK Prime Minister Boris Johnson has reacted angrily to European Commission Vice President Maros Sefcovic’s remarks that the UK will face legal action if it violates the Northern Ireland (NI) protocol. “There remain very serious problems in what I believe is the misapplication, the excessively legally purist application of that deal, of that protocol,” Johnson said, according to the Daily Mail. “What we’re hoping for is some progress from the European Commission, some repairs that I think they should make to the way that this is working,” he added.
The UK, on the other hand, saw the biggest number of covid cases since late January, surpassing 32,000, while the mortality toll fell. Alternatively, “a senior government official indicated Wednesday that Japan is likely to stage the Olympics without spectators at sites in Tokyo due to an increase in coronavirus cases,” according to Kyodo News. The same investigation looks into UK Prime Minister Boris Johnson’s unlock plans, prompting World Health Organization (WHO) official Mike Ryan to warn of the ‘epidemiological folly’ of early Covid unlocking, according to The Guardian.
It’s worth noting that the FOMC minutes appeared to have calmed market jitters for the time being, with the statement avoiding any shocks in support of the Fed’s early rate hike. Upbeat US data and expectations of a stronger rebound in the West may also be boosting sentiment.
S&P 500 Futures gain somewhat amid these moves, but US 10-year Treasury rates remain near their lowest levels since late February.
In the coming weeks, GBP/JPY traders will need to keep an eye on the covid and Brexit headlines for new impetus within a light calendar.
GBP/JPY bears are being tested by the 100-DMA at 152.20, but recovery advances would need to clear the 50-DMA level around 154.00 to reclaim buyers./n
