GBP/JPY drops 300 pips, at lowest since October as Wall Street extends slide

• Yen strengthens further while the pound remains weak amid risk aversion. 
• Wall Street extends selloff, Dow Jones falls more than 1,000 points. 

The GBP/JPY accelerated the decline and bottomed at 138.20, the lowest level since October. During the day it has fallen more than 300 pips and it is trading 600 pips below the level it closed last Friday. 

The cross is making a dramatic reversal amid risk aversion. While the yen continues to find demand as investors look for safe assets, the pound continues to be affected. While EUR/USD remains relatively steady, GBP/USD is taking another leg lower, now below 1.2800, adding more weakness to the sterling. 

It all about risk aversion 

The sharp slide in GBP/JPY gained speed over the last hour as Wall Street printed fresh lows. The Dow Jones drops more than 3% and crude oil 6.15%. Over the last hours among currencies the yen jumped. 

The selloff itself in equity market is becoming a significant problem and could worsen even further the economic outlook. More talks about rate cuts seem likely ahead. Today Federal Reserve officials spoke about that possibility if the impact of the corona virus intensifies. But the sharp decline in equity markets across the globe offers another argument in favor of more accommodation.