GBP/JPY Moves Away From Multi-Year Top, Slips To Around 205.00 On Intervention Fears

GBP/JPY fell for the second day on Friday and moved away from its highest level since August 2008, around 206.15 hit earlier this week. Spot prices are now trading just above the psychological 205.00 mark, down nearly 0.35% on the day, amid concerns that Japanese authorities or the Bank of Japan (BoJ) may intervene in the market to support the local currency.

In fact, Japanese Finance Minister Shunichi Suzuki said via wire earlier today that he would be watching the equity and foreign exchange markets closely with a vigilant attitude, adding that the weakness of the Japanese yen (JPY) is having an impact on prices. Nonetheless, any meaningful appreciation of the yen still seems elusive following the dovish stance of the Bank of Japan (BoJ). Beyond that, the prevailing risk-on environment should keep a lid on the yen’s risk aversion and limit GBP/JPY’s losses.

On the other hand, the British pound (GBP) received a small boost after exit polls showed that the main opposition Labour Party in the UK will win a large majority of seats in the UK general election. At the same time, this result sets the stage for the Bank of England (BOE) to cut interest rates in August, which will be bearish for the British pound and the GBP/JPY cross. In addition, the overbought relative strength index (RSI) on the daily chart may prompt some profit-taking as we head into the weekend. However, spot prices appear to be on track to close higher for the fourth consecutive week.

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