GBP/JPY drops 0.5% on Yen strength

• GBP/JPY hit a session low of 148.45.
• Weakness in the treasury yields and soft tone in the equities boost demand for the JPY.

GBP/JPY fell close to 90 pips in Asia to hit a session low of 148.45, largely on the back of a broad-based JPY rally.

Having failed to take out the resistance at 2.4 percent earlier this week, the US 10-year yield fell 2 basis points to 2.36 percent today. Also, the yield curve turned flattest since Oct. 2007.

This, coupled with a 0.20 percent drop in the S&P 500 futures strengthened the bid tone around the low yielding Japanese Yen.

Ahead in the day, the UK labor market data is expected to show wage growth lagging once again. Dismal wage price inflation could trigger another wave of selling in the GBP/JPY pair.

GBP/JPY Technical Levels

As of writing, the pair is trading at 148.60 levels. A breakdown of support at 148.45 (session low) would expose 148.00 (psychological level) and 147.77 (Oct. 17 low). On the other hand, a move above 149.04 (upward sloping 50-day MA) would open up upside towards 149.36 (session high). A violation there could yield a move higher to 150.00 (Nov. 10 high).