GBP/JPY SLIDES BELOW 136.00 MARK

GBP/JPY slides below 136.00 mark, fresh session low

23 July 2020, 16:02

• A combination of factors prompted some selling around GBP/JPY on Thursday.
• The lack of progress in the post-Brexit talks took its toll on the British pound.
• US-China tensions benefitted the safe-haven JPY and added to the selling bias.

The GBP/JPY cross refreshed daily lows in the last hour, with bears now looking to extend the slide further below the 136.00 round-figure mark. The cross failed to capitalize on the previous day's goodish intraday positive move to fresh six-week tops and witnessed a modest pullback on Thursday, from the 136.60-65 supply zone. The GBP/JPY cross, for now, seems to have snapped three consecutive days of the winning streak and the downtick was sponsored by the emergence of some fresh selling around the British pound. Market worries about a no-deal Brexit resurfaced after the latest negotiations in London ended this Thursday, wherein the UK and EU have said that they were still some way off reaching a post-Brexit trade agreement. Britain's chief Brexit negotiator David Frost said that Thursday's that they will not achieve the goal of striking a preliminary agreement by July end. Given that the UK has ruled out the possibility of extending the December deadline to reach a deal, the lack of progress on the UK's exit from the EU took its toll on the sterling. This comes amid concerns over worsening US-China relations, which benefitted the Japanese yen's perceived safe-haven status and further contributed to offered tone surrounding the GBP/JPY cross. Diplomatic tensions between the world's two largest economies escalated further after the US ordered China to close its consulate in Houston by Friday amid accusations of spying. China's foreign ministry condemned the move as “political provocation” and was reportedly closing the US consulate in Wuhan in retaliation. It will now be interesting to see if the cross is able to attract any dip-buying at lower levels or the latest leg down marks the end of over four-week-old positive trend.

Technical levels to watch