GBP/JPY moves away from multi-year top, slides to 205.00 neighborhood amid intervention fears

• GBP/JPY attracts sellers for the second straight day, though the downside seems limited.
• Intervention fears prompt some JPY short-covering and exert pressure on spot prices.
• The BoJ’s dovish stance and the risk-on mood warrant some caution for aggressive bears.

The GBP/JPY cross drifts lower for the second straight day on Friday and moves away from its highest level since August 2008, around the 206.15 area touched earlier this week. Spot prices currently trade just above the 205.00 psychological mark, down nearly 0.35% for the day amid fears that Japanese authorities or the Bank of Japan (BoJ) might intervene in the markets to prop up the domestic currency. 

In fact, Japan’s Finance Minister Shunichi Suzuki cross the wires earlier today and said that he will closely monitor stock and forex markets with vigilance, adding that a weak Japanese Yen (JPY) is having an impact on prices. That said, any meaningful JPY appreciation still seems elusive in the wake of a dovish stance adopted by the Bank of Japan (BoJ), which, so far, has been reluctant to provide a detailed plan for the reduction of bond purchases and further rate increases. Apart from this, the prevalent risk-on environment should cap the safe-haven JPY and limit losses for the GBP/JPY cross. 

The British Pound (GBP), on the other hand, gets a minor boost after exit polls suggested that Britain’s main opposition Labour Party was set to win a massive majority in the UK general election. Meanwhile, the outcome sets the stage for a rate cut by the Bank of England (BoE) in August, which should act as a headwind for the Sterling and the GBP/JPY cross. Furthermore, the overbought Relative Strength Index (RSI) on the daily chart might prompt some profit-taking heading into the weekend. Nevertheless, spot prices seem poised to end in the positive territory for the fourth successive week.