GBP/JPY pares early losses, bounces back closer to 133.00 mark
- GBP/JPY stalled its recent bullish momentum and snapped three consecutive days of winning streak.
- Concerns over global recession benefitted the JPY’s safe-haven status and exerted some pressure.
- A sustained break below the 132.00 mark needed to increase prospects for a further near-term downfall.
The GBP/JPY pair quickly recovered around 80 pips from daily lows, albeit seemed struggling to build on the momentum beyond the 133.00 round-figure mark.
The cross came under some selling pressure on the last trading day of the week and for now, seems to have stalled its recent strong positive momentum to two-week tops. The cross snapped three consecutive days of a winning streak and was being weighed down by reviving safe-haven demand for the Japanese yen.
The latest optimism over a massive $2.2 trillion US stimulus package turned out to be short-lived amid growing concerns over the economic fallout from the coronavirus pandemic. This eventually weighed on investors' sentiment and the same was evident from a weaker tone around the global equity markets.
Meanwhile, the number of confirmed coronavirus cases in the UK rose to nearly 12,000 and fueled fears that transmissibility might be faster than expected. The rapid spread of virus took its toll on the British pound and contributed to the intraday slide, though the cross found some support ahead of the 1.3200 mark.
In the absence of any major market-moving economic releases, the broader market risk sentiment might continue to influence the JPY's safe-haven demand. This coupled with developments surrounding the coronavirus saga might further infuse volatility in the FX market and produce some trading opportunities.
Technical levels to watch