Credit: REUTERS/THOMAS WHITESept 22 (Reuters) - Sterling faces a perfect storm of renewed COVID-19 restrictions , a looming Brexit deadline and negative-rates speculation that should make the pound a sell on rallies against the safe-haven yen.
Though the pound lifted off its lows after BoE Governor Andrew Bailey said the bank's research into negative rates did not mean it would use them , the headwinds facing Britain could keep speculation alive in markets.
GBP/JPY stopped at the day's 133.02 low as GBP/USD found support near its 200-day moving average at 1.2725.
GBP/JPY daily RSIs at 18 are oversold, but there are no other clear technical markers of a major low having been made. Prices have closed below the 100-DMA since Friday, now at 135.70. The daily tenkan has tumbled to 135.68, reinforcing that resistance, particularly with GBP/JPY and the tenkan below the daily cloud base at 135.96.
The last two daily closes fell below the 38.2% Fibo of the March-September pandemic recovery at 135.60, solidifying resistance there. GBP/JPY breached the 50% Fibo at 133.41, suggesting limited support and deeper retracement risk.
And, risk-sensitive GBP/JPY will need stock markets to regain traction.
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(Randolph Donney is a Reuters market analyst. The views expressed are his own.)
((Randolph.donney@thomsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
