GBP/JPY eases from daily tops, struggles to find acceptance above 151.00 mark
- GBP/USD attracted some dip-buying on Friday and stalled the previous day’s retracement slide.
- Weaker USD benefitted the sterling and extended some support amid fading safe-haven demand.
- The worsening COVID-19 situation in the UK held bulls from placing fresh bets and capped gains.
The GBP/JPY cross shot to fresh daily tops in the last hour, though struggled to capitalize on the move beyond the 151.00 mark and quickly retreated few pips thereafter.
A combination of factors assisted the GBP/JPY cross to attract some buying near the 150.45 area on Friday and stalled its retracement slide from one-and-half-week tops touched in the previous session. The underlying bullish sentiment undermined demand for the safe-haven Japanese yen, while the British pound benefitted from a modest US dollar weakness.
Concerns about the economic fallout from the Delta variant of the coronavirus eased after the US Food and Drug Administration (FDA) granted full approval to the Pfizer/BioNTech vaccine. This raised hopes that inoculations in the US could accelerate and boosted investors' confidence, which was evident from a generally positive tone around the equity markets.
Apart from the risk-on impulse, some repositioning trade ahead of the Fed Chair Jerome Powell's speech exerted some pressure on the greenback. This, in turn, acted as a tailwind for the sterling and further contributed to the GBP/JPY pair's goodish intraday bounce of around 60 pips. That said, the worsening COVID-19 situation in the UK capped any further gains.
It is worth mentioning that Britain has been reporting over 30K coronavirus cases over the past few days. This comes on the back of a study in the UK that protection from two doses of the Pfizer or AstraZeneca vaccines begins to wane within six months. Apart from this, Brexit woes kept a lid on any further gains for the GBP/JPY cross, at least for the time being.
There isn't any major market-moving economic data due for release from the UK on Friday, leaving the GBP/JPY cross at the mercy of the USD price dynamics and the broader market risk sentiment. Meanwhile, Powell's remarks later during the North American session might infuse some volatility in the FX market and produce some short-term trading opportunities.
Technical levels to watch