GBP/JPY extends recent decline to low 151.00s, bears eye 149.00 support zone as Russo-Ukraine woes continue

• GBP/JPY’s difficult run as of late continued on Monday, with the pair extending recent losses towards the 151.00 level.
• There are no signs of near-term de-escalation to the Russo-Ukraine war, suggesting further risk-off conditions ahead is a reasonable bet.
• GBP/JPY bears will now likely be targeting a test of 149.00, a key area of support, in the weeks ahead.

GBP/JPY’s difficult run as of late continued on Monday, with the pair extending recent losses towards the 151.00 level as FX investors sold risk-sensitive sterling in exchange for the safe-haven yen as choppy, risk-off market conditions continued. At current levels in the 151.20s, the pair trades a further 0.4% lower on the day on Monday, taking its three-day run-off losses from last week’s highs above 155.00 to more than 2.5%. With no signs of near-term de-escalation to the Russo-Ukraine war and, subsequently, no respite for the ongoing “commodity crisis” insight, expected more risk-off conditions ahead seems like a reasonable bet.

GBP/JPY bears will now likely be targeting a test of 149.00, a key area of support, in the weeks ahead. 149.00 has acted as a floor to the price action going all the way back to last July when the pair hit 148.50. It remains far too early to call for a meaningful break below this area of key support – indeed, at current levels, the pair still trades about 1.5% above these levels. However, if the impact of the Russo-Ukraine war and related Western sanctions do prove as bad as feared (i.e. a European stagflationary recession that knocks BoE/ECB tightening plans into reverse) and break in the coming weeks/months is most certainly on the cards.

If GBP/JPY was to fall below 158.00, it would have cleared all major levels of support all the way to around 145.00. Of course, that would be a big call to make (a roughly 4.0% drop from current levels). In the more immediate future, aside from geopolitics, traders will have other risks to keep an eye on, the most important of which will be next week’s BoE and BoJ policy meetings.