GBP/JPY stretches losses under 133.00, US-China tussle in focus
- GBP/JPY extends Friday’s losses amid risk-off sentiment.
- US and China jostle over the virus outbreak.
- UK government under fire with Cabinet Minister admitting mistakes.
- No major data, Japan off could keep trade/virus headlines in the driver’s seat.
GBP/JPY carries Friday’s losses forward while declining to 132.85, down 0.53% on a day, during the Asian session on Monday. In addition to the Tory government’s criticism over virus handling, the US-China arguments also recently flared the risk-off sentiment.
As per the SkyNews, “Cabinet minister Michael Gove admits the government will have "made mistakes" in the early stages of the coronavirus outbreak.” The update might gain spotlight in the Monday's debate in the House of Commons on the Health Protection (Coronavirus, Restrictions) Regulations. At the debate, the UK Government lockdown to come under sustained criticism from Conservative MPs, per the Telegraph.
Even so, Tory leaders might speak for their ability to release health passports in the upcoming months and the hospital trials of a drug to defend the government’s performance.
What’s even more important off-late is the US-China tussle over the virus outbreak. US President Donald Trump has intensified his criticism of the dragon nation’s role over the broad spread of the deadly virus. The Republican leader cited an intelligence report that backs his arguments. Over the counter, China’s Global Times mentions all these allegations as a bluff to lure the voters.
Amid all these plays, the S&P 500 Futures drop over 1.5% to 2,778 while Japan’s off keep the US 10-year Treasury yields around 0.618%, down 2.2 basis points (bps).
Given the lack of major data, as well as the bank holiday in Japan, traders may keep eyes on the trade/virus headlines for fresh impulse.
Technical analysis
While extending its pullback from 50-day EMA, GBP/JPY slips below 21-day EMA, which in turn increases the odds for its further fall towards April low near 131.90. On the contrary, buyers will stay away unless the pair decisively break a 50-day EMA level of 134.85 on a daily closing basis.