GBP/JPY consolidates recent losses around 152.00 on cautious optimism

• GBP/JPY reverses the pullback from three-week top, edges higher of late.
• UK up for extending NI protocol grace period but EU rejects renegotiations.
• Britain reports a jump in virus cases, easy death numbers, Tokyo reports the first below 1,000 infections since July 19.
• Risk catalysts remain as the key drivers amid a light calendar, return of the US, Canadian traders eyed as well.

GBP/JPY remains on the recovery mode around 152.00 while reversing the previous day’s losses, the first in seven days, amid Tuesday’s Asian session. The cross-currency pair’s pullback from the highest since August 13, marked the previous day, could be linked to the sluggish markets and covid fears, not to forget Brexit uncertainty. However, the latest updates have been positive and help the quote to rebound.

Virus concerns remained grim in the UK and Japan during the weekend but the latest drop in the British virus-led deaths to 45, from 68, joins Tokyo’s 968 infections, the first below 1,000 in seven weeks, to keep the GBP/JPY buyers hopeful.

Also on the positive side could be the latest chatters surrounding Brexit as the UK braces for extending the no-checks period for the good traveling to the UK from Northern Ireland. However, the European Union (EU) aid that they take note of the UK ministerial statement regarding the operation of the Northern Ireland protocol on the current basis while also adding, per Reuters, “However, we will not agree to a renegotiation of the Northern Ireland protocol."

Elsewhere, Japan’s ruling party head candidate Fumio Kishida called for compiling a stimulus package of over 30 trillion yen ($273 billion) to cushion the economic blow from the coronavirus pandemic, per Reuters quoting the local magazine. Japan’s current Prime Minister (PM) Yoshihide Suga has already hinted at his resignation from the post amid widespread mishandling of the covid conditions and holding of Olympics and Paralympics.

In addition to the virus updates and the Brexit, as well as political headlines, softer prints of Japan’s Overall Household Spending for July, 0.7% versus 2.9% expected for YoY, also favor GBP/JPY buyers. It’s worth noting that the UK’s BRC Like-For-Like Retail Sales also eased to 1.5% from 4.7% in August.

Amid these plays, S&P 500 Futures and the US 10-year Treasury yields remain mildly bid by the press time.

Given the anticipated return of the US and Canadian traders after a holiday, GBP/JPY traders may witness comparatively more active session, mostly towards the north, despite lacking any major economics.

Technical analysis

Despite easing below a descending trend line from late May, around 152.30, 50-DMA near 151.90 restricts short-term GBP/JPY downside.