GBP/JPY retreats from over one-week tops, still well bid around 153.70-75 area
- GBP/JPY gained positive traction for the second straight day and shot to over one week tops.
- The optimism over the easing of COVID-19 restrictions in the UK underpinned the British pound.
- Concerns about the Delta variant of the COVID-19 benefitted the safe-haven JPY and capped gains.
The GBP/JPY cross shot to over one-week tops during the early European session, albeit quickly retreated few pips thereafter and was last seen trading around the 153.75-70 region.
The cross added to the previous day's modest gains and scaled higher for the second consecutive session on Tuesday. The latest optimism over the final step of lifting lockdown in the UK continued acting as a tailwind for the British pound. This, in turn, was seen as a key factor that provided a goodish lift to the GBP/JPY cross.
On Monday, Johnson announced that all restrictive measures would be lifted on July 19, including regulations mandating face masks and social distancing rules. Johnson further added that people will no longer be instructed to work from home and that there will be no limits on how many people can meet socially, or where they can meet.
Bulls, however, struggled to capitalize on the move or find acceptance above the 154.00 mark amid a modest pickup in demand for the Japanese yen. A softer tone surrounding the US dollar, along with concerns about the spread of the highly contagious Delta variant of the coronavirus, benefitted the safe-haven JPY and capped gains for the GBP/JPY cross.
The pair has now retreated around 35-40 pips from daily swing highs as market participants now look forward to the release of the UK Construction PMI for some impetus. Apart from this, the development surrounding the coronavirus saga will influence the safe-haven JPY and produce some short-term trading opportunities around the GBP/JPY cross.
Technical levels to watch