GBP/JPY has been a risk proxy this year and this latest bout of worries is no different. The stock market overstates the amount of concern in FX and broader markets but, like stocks, the pair is on the razor’s edge.
The pair cracked earlier today on the break of 170.00 as it simultaneously broke the uptrend since February. That led to a 50 pip fall in 15 minutes but the pair spent the hours since crawling back.
Not only that, the 55-day and 100-day moving averages both converge just below 170. Finally, the 55-dma has fallen below the 100-dma in a death cross.
GBP/JPY daily
If GBP/JPY can hold these levels, there’s some reason for optimism but if it’s breaks, it could get ugly. The pair is walking a very fine line.