GBP/JPY drops to lowest since October 2016, now on Yen’s strength

• Trump tweets more tariffs triggering risk aversion, Yen soars. 
• GBP/JPY extends losses to multi-year lows, approaches 130.00

After a brief pause yesterday, the GBP/JPY pair resumed the decline on Thursday. Over the last weeks, a decline of the pound was the main driver but today, the crucial factor was a rally of the Japanese yen. 

The GBP/JPY was already lower and accelerated to the downside following a tweet from US President Trump, announcing more tariffs to Chinese goods. "Trade talks are continuing, and during the talks the US will start, on September 1st, putting a small additional tariff of 10% on the remaining 300 billion dollars of goods and products coming from China into our country," he tweeted out, adding "this does not include the 250 billion dollars already tariffed at 25%."

Trump’s announcement triggered a flight-to-safety that boosted the yen further to the upside. GBP/JPY tumbled to 130.39, the lowest level since October 2016. Near the end of the session, it was holding near the lows still under intense bearish pressure. The DOW JONES  was down more than 1% while US yields were sharply lower. The 10-year fell below 1.90%, the lowest since 2016. 

Technical levels