GBP/JPY strengthens further beyond 134.00 mark, closer to 2-week tops set on Friday
- GBP/JPY reverses an early tip and moves back closer to two-week tops set on Friday.
- The reaction to the UK’s sovereign debt rating downgrade turned out to be short-lived.
- Fading safe-haven demand weighed on the JPY and remained supportive of the uptick
The GBP/JPY cross built on its steady intraday positive move and climbed further beyond the 134.00 round-figure mark, refreshing session tops in the last hour.
The cross witnessed some selling during the early part of Monday's trading action and was being weighed down by a combination of negative factors, albeit the downtick turned out to be short-lived, rather was quickly bought into.
The British pound was pressurized by the fact that Fitch lowered its UK long-term issuer default ratings to AA- from AA, citing the weakening of UK's public finances amid COVID-19 crisis and the uncertainty about the post-Brexit trade relationship with the EU.
On the other hand, tightening lockdowns across the world continued fueling fears over the global economic fallout from the coronavirus pandemic, which benefitted the Japanese yen's safe-haven status and further collaborated to the pair's early decline.
As investors looked past the latest developments, a goodish recovery in the global risk sentiment dented demand for traditional safe-haven assets. This coupled with some GBP dip-buying contributed to the pair's goodish intraday positive move of over 150 pips.
It will now be interesting to see if the cross is able to capitalize on the move or fails near the key 135.00 psychological mark as the focus remains on developments surrounding the coronavirus saga, which remains a key driver of the broader market risk sentiment.
Technical levels to watch