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GBP/JPY jumps to near 2-week tops, further beyond 1.3300 mark

  • GBP/JPY added to the overnight gains and extended its recovery from multi-year lows.
  • Fading safe-haven demand weighed on the JPY and remained supportive of the move.
  • Fears over an imminent global recession might keep a lid on any strong follow-through.

The buying interest around the British pound picked up pace in the last hour and lifted the GBP/JPY cross to two-week tops, closer to mid-133.00s.

A combination of factors assisted the cross to build on its recent strong recovery move from multi-year lows and gain some follow-through traction for the second consecutive session on Wednesday.

The rebound rebounded after the UK imposed stricter lockdown measures to combat the COVID-19 pandemic and was further supported by Wednesday mostly in line UK consumer inflation figures.

This coupled with improving global risk-sentiment undermined the Japanese yen's safe-haven demand and further contributed to the pair's positive move for the fourth session in the previous five.

Investors' confidence got a strong boost in the wake of the Fed's open-ended/unlimited QE and the US Senate's agreement on a stimulus package to offset any negative impact from the virus outbreak.

Meanwhile, possibilities of some short-term trading stops being triggered on a sustained move beyond the 132.00 round-figure mark further contributed to the pair's strong momentum on Wednesday.

It, however, remains to be seen if bulls are able to capitalize on the move or opt to lighten their positions amid mounting fears over an imminent global recession, which should benefit the JPY's safe-haven status.

Technical levels to watch

 

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