GBP/JPY consolidates biggest losses in a month below 150.00, UK Retail Sales eyed

• GBP/JPY bounces off one-month low, picks up bids to intraday high.
• Market sentiment mildly improves amid vaccine optimism but covid woes remain dominant.
• Japan inflation data came in mixed for July, UK GfK Consumer Confidence eased for August.
• UK Retail Sales, risk catalysts are the key for fresh direction.

GBP/JPY remains mildly bids around 149.80 during early Friday. The cross-currency pair dropped the most since late July the previous day as covid woes weighed on the market sentiment. The latest corrective pullback could be linked to the mixed data from Japan and vaccine optimism.

The GfK Consumer Confidence for August matched the -8 forecast versus -7 prior. “British consumer morale cooled a little after touching its highest level since the start of the COVID-19 pandemic,” said Reuters after the release.

On the other hand, Japan’s National Consumer Price Index (CPI) for July dropped below +0.6% market consensus but stayed above -0.5% previous readouts to -0.3% YoY. Further, National CPI ex-Food, Energy recovered from -0.2% market consensus and -0.9% downwardly revised prior to -0.1%.

Other than the upbeat data chatters surrounding covid vaccine booster shots also favored the GBP/JPY bounce from the multi-day low.

On Thursday, multi-month high death tolls and record coronavirus cases weighed on the risk appetite, underpinning the Japanese yen’s safe-haven demand. The same joined fears of the Fed’s tapering and Brexit tussles in the UK to exert additional downside pressure on the GBP/JPY prices the previous day.

Also challenging the risk appetite and favor GBP/JPY bears on yesterday were Brexit fears as the UK’s departure from the bloc is blamed for the chicken woes in Britain and the drain of the British bankers from the European Union (EU).

Amid these plays, S&P 500 Futures and the US 10-year Treasury yields print mild gains by the press time.

Looking forward, sentiment-related headlines will be observed to gauge the GBP/JPY pair’s near-term moves. Additionally, the UK Retail Sales for July, expected to ease from +9.7% to +6.0% YoY, will also be important to watch.

Technical analysis

Unless bouncing back beyond the early August lows near 151.20, the GBP/JPY prices remain vulnerable to test 148.45-35 area, comprising July’s low and 200-DMA.