GBP/JPY tracks S&P 500 Futures to pare biggest slump since July around 149.50

GBP/JPY picks up bids to refresh intraday top, snaps five-day downtrend.
S&P 500 Futures consolidate losses around two-month low.
Traders digest Evergrande woes as off in China restrict market reactions.
UK PM Johnson pushes for climate pledge, says relationship with France “indestructible”.

GBP/JPY rebound aims to regain 150.00, up 0.13% intraday near 149.65 during early Tuesday. The cross-currency pair dropped the most since July the previous day amid risk-off mood before the recent consolidation in the markets allowed the U-turn from a two-month low.

Although Japan’s Nikkei 225 drops 1.65% by the press time, S&P 500 Futures recover from July 20 lows, gaining 0.30% on a day near 4,361 at the latest.

The global push towards clean energy, mainly by UK PM Boris Johnson, joins US President Joe Biden’s promotion to the United Nations (UN) partnership to underpin the latest cautious optimism. On the same line were chatters relating to the US debt limit extension and recently positive US housing data, which in turn challenges the Fed tapering concerns.

Also on the positive side could be comments from the UK’s business secretary Kwasi Kwarteng who rejected warnings about energy shortages. Furthermore, UK PM Johnson’s statements that Britain’s relationship with France is “indestructible” also favor the cross-currency pair to pick up bids of late.

On the contrary, China’s Evergrande remains as the key risk when the full markets return on Wednesday. Also challenging the sentiment is the US Federal Reserve (Fed) monetary policy meeting the Bank of England (BOE) meeting, respectively on Wednesday and Thursday.

Given the odds of witnessing sour sentiment ahead being higher than the latest rebound, GBP/JPY bulls should remain cautious and check macros for fresh impulse.

Read: Can the Fed disrupt stock market gains, and why China’s evergrande is causing wobbles elsewhere

Technical analysis

Corrective pullback needs to overcome the 200-DMA hurdle, surrounding 149.75, as well as the 15.00 threshold, to convince GBP/JPY buyers.