- GBP / JPY advanced to its highest level in 14 months on Tuesday.
- Risk appetite helps JPY find demand on Wednesday.
- The BoE’s Ramsden says they are not looking to undo gold purchases at any point in the near future.
The GBP/JPY It extended its rally and touched its highest level since December 2019 at 147.47 on Tuesday. However, safe haven flows helped the JPY to gain strength on Wednesday and forced the pair to make a correction. At time of writing, the pair is down 0.48% on the day to 146.70 and is on track to break its three-day winning streak.
JPY capitalizes safe haven flows
The poor performance of the major world stock indices boosted the JPY earlier in the day. In addition, the sharp drop seen in US Treasury yields allowed the bearish momentum to remain intact in the second half of the day. At the moment, the S&P 500 is down 0.3% on the day and the yield on the 10-year US Treasury is losing 2%.
UK data showed on Wednesday that the Basic Consumer Price Index in January was unchanged at 1.4% annually.
Meanwhile, dovish comments from Bank of England (BoE) Deputy Governor Dave Ramsden kept sterling on the defensive. Ramsden said they will not think about undoing the gold purchases anytime soon. “We will need solid evidence of sustained progress in the use of available capacity and that inflation returns to target, before adjusting policy,” he added.
No significant macroeconomic data from Japan or the UK will be released on Thursday and risk perception is likely to continue to affect GBP / JPY movements.
Technical levels
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