GBP/JPY refreshes session lows, risks breaking below 151.00 mark

• GBP/JPY witnessed some heavy selling on Friday and snapped five days of the winning streak.
• A softer risk tone benefitted the safe-haven JPY and was seen as a key factor exerting pressure.
• UK political noise, the Scottish elections risk weighed on the GBP and added to the selling bias.

The GBP/JPY cross continued losing ground through the early North American session and dropped to fresh daily lows, around the 151.00 mark in the last hour.

Having struggled to find acceptance above the 152.00 mark, the cross came under some heavy selling pressure on Friday and has now eroded a part of its weekly gains. This marked the first day of a negative move in the previous six sessions and was sponsored by a combination of factors.

Investors remain worried that surging COVID-19 cases in India, Japan and Brazil could derail the global economic recovery. This, along with the slowing pace of growth in the Chinese manufacturing sector, took its toll on the global risk sentiment and benefitted the safe-haven Japanese yen.

On the other hand, the British pound was pressured by the risk posed by the Scottish elections next week. Polls are pointing to a supermajority for pro-independence parties in Scotland's parliament, which might intensify pressure for a referendum on independence and weigh on the sterling.

With the latest leg down, the GBP/JPY cross now seems to have stalled its recent strong rebound from the 149.00 mark. A subsequent break below the 151.00 mark will set the stage for the resumption of the recent corrective pullback from three-year tops touched earlier this April.

Technical levels to watch