GBP/JPY retreats sharply from multi-year top, slides to fresh daily low around 160.00 mark

• GBP/JPY witnessed an intraday turnaround from the multi-year peak touched earlier this Wednesday.
• The downfall was exclusively sponsored by the emergence of some selling around the British pound.
• Modest pullback in the equity markets benefitted the safe-haven JPY and contributed to the decline.

The GBP/JPY cross surrendered its intraday gains to the multi-year peak and dropped to a fresh daily low, back closer to the 160.00 mark during the early part of the European session. 

The cross built on the previous day's blowout rally and gained some follow-through traction through the first half of the trading on Wednesday. This marked the fourth successive day of a positive move - also the eight in the previous nine - and was sponsored by the heavily offered tone surrounding the Japanese yen.

Despite worries about the economic impact of the war in Ukraine, an extended sell-off in the bond markets continued driving flows toward big tech and other beaten-down stocks. This, in turn, was seen as a key factor that weighed on safe-haven JPY and pushed the GBP/JPY cross to its highest level since May 2016.

Spot prices, however, struggled to find acceptance above the 161.00 round figure amid the emergence of some selling around the British pound. The fact that the Bank of England had softened its language around the need for future rate hikes at the last week's meeting held back the GBP bulls from placing fresh bets.

On the economic data front, the UK Office for National Statistics reported that the headline CPI accelerated to the highest since March 1992 and came in at 6.2% YoY in February. This was above the expected rise to 5.9% from the 5.5% reported in the previous month, though failed to provide impetus to sterling.

Apart from this, a modest pullback in the equity markets extended some support to the JPY and further contributed to the GBP/JPY pair's sharp intraday slide of nearly 100 pips from the daily peak. Traders now look forward to BoE Governor Andrew Bailey's remarks at the BIS innovation summit for some short-term opportunities.

Technical levels to watch