GBP/JPY drops to four-day lows, further below mid-150.00s

• GBP/JPY witnessed some follow-through selling for the second successive day.
• The ongoing fuel crisis in the UK continued acting as a headwind for the sterling.
• Retreating bond yields benefitted the JPY and also contributed to the selling bias.

The GBP/JPY cross edged lower through the early European session and dropped to four-day lows, below mid-150.00s in the last hour.

Following an early uptick to the 151.20 area, the GBP/JPY cross met with some fresh supply and drifted into the negative territory for the second successive day. The downfall dragged the cross further away from two-week tops touched in the previous session and was sponsored by a combination of factors.

The British pound continues to be weighed down by increasing signs of the fuel crisis in the United Kingdom due to the post-Brexit shortage of truck drivers. The UK is estimated to be short of more than 100,000 lorry drivers, which has disrupted the supply of many goods in recent months.

On the other hand, a pullback in the government bond yields benefitted the non-yielding Japanese yen and further exerted pressure on the GBP/JPY cross. It is worth mentioning that the 10-year Japanese government bond yield remains near zero due to the Bank of Japan's yield curve control policy.

Bulls seemed rather unimpressed by a solid recovery in the equity markets, which tends to undermine the safe-haven JPY. This, in turn, supports prospects for a further near-term depreciating move for the GBP/JPY cross and a subsequent slide below the key 150.00 psychological mark.

Market participants now look forward to speeches by BoJ Governor Haruhiko Kuroda and the Bank of England Chief Andrew Bailey later during the North American session. Apart from this, the broader market risk sentiment might provide some meaningful impetus to the GBP/JPY cross.

Technical levels to watch