The GBP/JPY cross maintained its strong bid tone through the early European session and is currently placed near the top end of its daily trading range, just above the 134.00 marks.
Following a brief consolidation through the early part of Friday’s trading action, the cross caught some aggressive bids and has now recovered a major part of the previous day’s steep decline to five-month lows.
A sudden turnaround in the global risk sentiment, supported by a coordinated move by the Fed and BoJ, weigh on the Japanese yen’s safe-haven status and triggered the pair’s initial leg of the intraday positive move.
It is worth reporting that the Fed on Thursday announced that it will inject more than $1.5 trillion of temporary liquidity into the short-term funding markets to calm an unusual disruption in the US Treasury markets.
Meanwhile, the BoJ on Friday injected 500 billion yen into the system via an unscheduled repo operation and later announced an unscheduled buying of JGBs to stabilize the markets amid the coronavirus outbreak.
Apart from the mentioned factors, a modest rebound in the GBP/USD pair, led by some intraday short-covering move amid a subdued USD demand, further collaborated to the pair’s strong rally of around 175 pips.
It will now be interesting to see if the cross is able to capitalize on the recovery move or meets with some fresh supply at higher levels amid persistent worries about the economic impact of the deadly coronavirus.
GBP/JPY LONG (Buy)
ENTER TA: 134.702