- GBP/JPY edged higher for the fifth consecutive session on Monday.
- A broad-based USD weakness extended some support to the sterling.
- COVID-19 jitters benefitted the safe-haven JPY and might cap gains.
The GBP/JPY cross reversed an early European session dip to the 151.40 region and shot to over one-week tops, around the 152.15-20 region in the last hour.
The cross attracted some dip-buying on the first day of a new trading week and turned positive for the fifth consecutive session amid a modest pickup in demand for the British pound. Despite the EU-UK impasse over the Northern Ireland Protocol, a weaker US dollar extended some support to the sterling. It is worth recalling that the EU rejected the UK's demand to rewrite a deal overseeing problematic post-Brexit trade involving Northern Ireland.
Meanwhile, the COVID-19 situation in Britain has been worsening over the last few weeks amid the spread of the highly contagious Delta variant of the virus. This might hold traders from placing any aggressive bullish bets around the GBP/JPY cross. Apart from this, the risk-off impulse in the markets benefitted the safe-haven Japanese yen and might further collaborate towards capping the upside 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. This further makes it prudent to wait for some strong follow-through buying before confirming that the GBP/JPY cross has bottomed out near the 148.45 region, or four-month lows touched last week. The next relevant hurdle is pegged near the 152.60-65 region, above which the cross seems all set to aim back to reclaim the 153.00 round-figure mark.
Technical levels to watch
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