The GBP/JPY cross attracts some follow-through selling for the second consecutive day and drops to a one-and-a-half-week low during the early European session on Friday.
Spot prices, however, rebounded a few pips in the last hour and currently trade near the 211.75 region, down 0.25% for the day
The British Pound (GBP) continues with its underperformance in the wake of the deepening UK political crisis and turns out to be a key factor weighing on the GBP/JPY cross. The downside, however, remains cushioned amid a broadly weaker Japanese Yen (JPY), led by concerns about economic risks stemming from the Middle East conflict and a firmer US Dollar (USD). This, in turn, holds back bearish traders from placing aggressive bets, though the technical setup suggests that the path of least resistance for spot prices is to the downside.
The GBP/JPY cross holds beneath the 100-period Simple Moving average (SMA) and the nearby 50% Fibonacci retracement level of the February-April upswing. Moreover, clustered overhead resistance aligns at the 38.2% Fibo. at 212.97 and the 23.6% level at 214.32, suggesting rallies are likely to meet supply. Momentum indicators also reinforce the negative tone, with the Relative Strength Index (RSI) slipping into oversold territory near 30 and the Moving Average Convergence Divergence (MACD) below zero with a negative histogram.