GBP/JPY remains heavy near 160.00 amid BOJ-led resurgent JPY demand

• GBP/JPY is off the multi-day lows but not out of the woods yet.
• The yen leaps on persistent BOJ bond-buying, Japanese fiscal year-end flows.
• The pound bears the brunt of cautious BOE against the Fed’s hawkishness.

GBP/JPY is reversing a sharp fall below 160.00, as bears take a breather before the next push lower.

The buying interest around the Japanese yen remains unabated, which is likely to keep any upside attempts in the cross short-lived.

The yen gathered sudden strength over the last hour and triggered a huge sell-off in the USD/JPY pair, throwing the yen crosses under the bus.

The Bank of Japan's (BOJ) persistent efforts to defend the yield target at 0.25%, as it continues to buy Japanese Government Bond (JGBs) for the third consecutive day, are finally offering the much-needed support to JPY bulls.

The Japanese central bank has pledged to increase its offers to buy bonds after announcing that they offer to buy 600B yen in 3-5 yr JGBs and 725B yen in 5-10 yr JGBs, earlier on.

On the other side, the bearish sentiment around the pound also adds to the pain in the GBP/JPY cross. The BOE is likely to refrain from raising rates in its May meeting, as risks to the UK economic growth increase amid soaring inflation and the Ukraine uncertainty.

In his speech on Monday, BOE Governor Andrew Bailey sounded cautious, as he said that the situation was very volatile when asked about the May rate hike decision.

Looking ahead, the repatriation flows in the yen combined with the BOJ’s intervention will be closely eyed alongside the US ADP employment data. Further, the price action in the US Treasury yields and Ukraine updates could also have a significant impact on the pair.

GBP/JPY technical levels to watch