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- GBP/JPY struggled to capitalize on its modest intraday gains back closer to over a one-week high.
- The cautious market mood underpinned the safe-haven JPY and capped the upside for the cross.
- Subdued USD demand benefitted the GBP and extended some support, at least for the time being.
The GBP/JPY cross surrendered its modest intraday gains and was last seen trading in the neutral territory, around the 161.80-161.75 region.
The cross attracted some dip-buying near the 161.40 area on Thursday and climbed back closer to over a one-week high touched the previous day, though the uptick lacked bullish conviction. The European equity markets recovered from the overnight selloff, which undermined the safe-haven Japanese yen and extended some support to the GBP/JPY cross.
Apart from this, comments from Bank of Japan board member Asahi Noguchi, saying that the central bank must stick to its ultra-easy policy despite rising inflationary pressures, also weighed on the JPY. On the other hand, some cross-driven strength stemming from the fall in the EUR/GBP cross benefitted sterling amid subdued US dollar price action.
The combination of factors did provide an intraday lift to the GBP/JPY cross, through the prevalent cautious market mood kept a lid on any meaningful upside, at least for the time being. The market sentiment remains fragile amid fading hopes for a diplomatic solution to end the war in Ukraine and the prospect of more Western sanctions on Russia.
Hence, the focus will remain on new developments surrounding the Russia-Ukraine saga amid absent relevant market moving economic releases from the UK on Thursday. The incoming geopolitical headlines would influence the risk sentiment, which, in turn, will drive demand for safe-haven assets, including the JPY, and provide impetus to the GBP/JPY cross.