GBP/JPY refreshes daily low, drops back closer to mid-157.00s amid risk-off mood – by hareshmenghani GBPJPY BOJ Recession BOE Currencies
n Thursday. Spot prices snap a three-day winning streak and drop back closer to mid-157.00s, hitting a fresh daily low heading into the European session.
As investors digest the Bank of Japan's dovish policy decision on Wednesday, looming recession risks boost demand for the safe-haven Japanese Yen and exert pressure on the GBP/JPY cross. Investors remain concerned about the potential headwinds stemming from the worst yet COVID-19 outbreak in China. Apart from this, the protracted Russia-Ukraine war has been fueling worries about a deeper global economic downturn.
The fears were fueled by Wednesday's weaker US macro data, which showed that retail sales in December fell by the most in a year and manufacturing output recorded its biggest drop in nearly two years. This, in turn, forces investors to take refuge in traditional safe-haven assets and benefits the JPY.
In the absence of any relevant market-moving economic releases from the UK, the aforementioned mixed fundamental backdrop warrants some caution for aggressive bearish traders. Hence, it will be prudent to wait for strong follow-through selling before positioning for any further depreciating move for the GBP/JPY cross.
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