- A combination of factors continued dragging GBP/JPY lower on the last day of the week.
- Disappointing UK Retail Sales added to worries about job losses and weighed on the GBP.
- COVID-19 jitters benefitted the safe-haven JPY and contributed to the ongoing downfall.
The GBP/JPY cross maintained its offered tone through the mid-European session and was last seen hovering near one-month lows, around the 149.20-25 region.
The cross prolonged its recent retracement slide from the 153.30-40 supply zone and witnessed some follow-through selling on the last trading day of the week. This marked the sixth day of a negative move in the previous seven and was sponsored by a combination of factors.
The British pound started losing ground following the disappointing UK macro data, which showed that monthly Retail Sales unexpectedly dropped by 2.5% in July. Adding to this, sales excluding fuel declined 2.4% during the reported month and readings for June were also revised lower.
This comes on the back of Wednesday’s softer UK consumer inflation figures and worries that job losses in Britain will rise after the furlough scheme ends in September. Investors now seem to have pushed back expectations for a rate hike from the BoE, which, in turn, undermined the sterling.
On the other hand, the prevalent risk-off environment benefitted the Japanese yen's relative safe-haven status and contributed to the GBP/JPY pair's ongoing decline. Persistent COVID-19 jitters, along with the Fed's taper outlook took its toll on the global risk sentiment.
Apart from this, the downfall could further be attributed to some technical selling below the 150.00 psychological mark. With oscillators on the daily chart still away from being in the oversold zone, the GBP/JPY cross seems poised to challenge July swing lows, around the 148.45 region.
