GBP/JPY stays depressed below 151.00 amid cautious markets ahead of the key events

• GBP/JPY sellers take a breather after the biggest daily fall in a week.
• Irish PM stays hopeful NI protocol, UK hints at data-sharing rules post-Brexit.
• British covid cases rise, death toll eases while Japan doubts mixed virus figures.
• Tokyo CPI eased, Jackson Hole Symposium is in the focus.

GBP/JPY licks its wounds around 150.60 during a quiet Asian session on Friday. The pair dropped the most since August 19 the previous day as risk-off mood intensified. However, the cautious sentiment in the market ahead of the key Jackson Hole Speech of the Fed Chair Jerome Powell restricts the pair’s latest moves.

In doing so, the cross-currency pair ignores Tokyo Consumer Price Index (CPI) data for July that reprints -0.4% level versus 0.0% expected. Tokyo CPI ex Food, Energy eased below 0.0% expected to -0.1% but recovered from -0.4% revised prior.

While portraying the mood, S&P 500 Futures print mild losses, tracking the Wall Street benchmarks, whereas the US 10-year Treasury yields remain pressured around 1.34% at the latest.

The Fed’s tapering concerns and escalating covid woes, not to forget geopolitical tension emanating from Afghanistan, sour the market sentiment. Dallas Fed President Robert Kaplan tops Fedspeakers in renewing the tapering tantrum by saying, “Fed's asset purchases had their purpose and their time but not longer well-suited to the situation.” James Bullard and Ester George were the rest of the non-voting Fed members who followed Kaplan and firmed up concerns over tapering.

Elsewhere, Reuters came out with the covid updates for Thursday by saying, “Britain reported 38,281 new cases of COVID-19, government data showed on Thursday, while a further 140 people were recorded as having died within 28 days of a positive test. The data compared with 35,847 cases reported on Wednesday and 149 deaths.” On the other hand, Japan’s Kyodo News said, “Health experts warned Thursday it is too early to judge whether coronavirus cases in Tokyo are on a downward trend, despite relatively fewer numbers in recent days, citing the possibility that many infected people remain untested.”

Blast at Kabul airport and reports of two or three US officials being hurt raised worries of the US response to the Taliban and weighed on the risk appetite. Furthermore, the European Union’s (EU) ex-Brexit negotiator Michael Barnier’s candidature for the French PM propels Brexit fears. Alternatively, Irish PM Micheal Martin’s optimism to overcome the Northern Ireland (NI) protocol issues between the EU and the UK challenge the bears even as fears of sour Christmas loom.

Moving on, global market players will keep their eyes on the Jackson Hole for fresh impulse but Brexit and coronavirus may offer intermediate direction.

Technical analysis

Failures to cross 151.50-55 hurdle comprising 20-DMA and early August levels keep GBP/JPY sellers hopeful to refresh the monthly low of 149.18.