- A combination of factors continued to drag GBP / JPY lower.
- Disappointing UK retail sales added to UK concerns.
- The nervousness over COVID cases benefited the JPY.
The GBP / JPY cross maintained its offered tone during the European session and fell to 149.17, the lowest intraday level in a month. The pound is on its way to the lowest close since March against the yen. The cross extended its recent decline from 153.30-40 and fell on Friday for the sixth time in the last eight sessions, due to a combination of factors.
The libra sterling on Friday extended to weakness amid disappointing macro data from the United Kingdom, which showed that retail sales unexpectedly fell 2.5% in July. In addition, sales excluding fuel decreased 2.4% and June readings were also revised down.
This comes after Wednesday’s consumer inflation figures and fears about the impact of the end of the employment support program in September. Investors now appear to have delayed expectations of a rate hike by the Bank of England.
On the other hand, the prevailing risk environment around equity markets benefited the yen japonés and contributed to the continued decline of the GBP / JPY. Lingering nervousness from COVID-19, coupled with the Fed’s tightening outlook, weighed on global risk sentiment.
Aside from this, the drop could be further attributed to some technical selling below the 150.00 psychological mark. With oscillators on the day chart still far from oversold, GBP / JPY looks poised to challenge the July lows around the 148.45 region.
Technical levels
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