GBP/JPY bounces off lows, eyes on 130.00

After dropping to levels last seen in September 2012 near 124.00, GBP/JPY has managed to pick up some pace and is currently approaching the 130.00 handle.

GBP/JPY much weaker on GBP collapse

The cross suddenly dropped to the vicinity of 124.00 the figure in response to the abrupt slump of the British Pound earlier in the Asian session.

Market participants keep pointing to comments by France’s F.Hollande as the trigger for the unexpected fall in the Sterling. Hollande said that ‘Britain must suffer the consequences of leaving the EU in order to save the institution from an existential crisis”, as cited in an article on the FT times yesterday.

Hollande’s comments added to the already weak currency in light of heightened concerns over the potential consequences for the UK economy, and GBP, of the Brexit vote.

In the data space, UK’s manufacturing and industrial production are due later in the European morning, seconded by trade balance figures and the NIESR GDP Estimate.

GBP/JPY key levels

As the moment the cross is losing 1.35% at 129.38 facing the next support at 124.10 (low Oct.7) followed by 121.02 (monthly low August 2012. On the other hand, the initial resistance lines up at 132.09 (20-day sma) followed by 133.51 (55-day sma).