- Japanese yen soars across the board after economic data.
- The July CPI in the US rises below expectations causing a rise in Treasury bonds.
- GBP/JPY trims losses after falling to 161.67, the lowest since August 5.
The crossing GBP/JPY lost nearly 200 pips after the release of US inflation data triggered a rally in the Japanese yen across the board. He bottomed out at 161.67 and then went back up to 162-00.
The US CPI ends a period of calm
The annual rate of the US CPI fell from 9.1% to 8.5% in July, against the market consensus of 8.7%. The figures sparked a rally in US stocks and bonds. Expectations continue to point to further tightening by the Federal Reserve, but the doors are open for less aggressive action. Still, market participants see a rate hike of at least 50 basis points at the next meeting.
Improved risk appetite failed to boost GBP/JPY, which retreated amid falling yields and despite GBP/USD rallying above 1.2200.
The GBP/JPY cross was testing key resistance around 163.60 before the report. On the move down, it broke 162.80, which is now the immediate resistance.
Technical indicators favor the downside in the short term. A recovery above 162.80 would see the pound retest 163.80. While below 162.80, the crucial downside zone is 162.00; a break down would expose the next support area at 161.10.
GBP/JPY 4-hour chart
Technical levels
164.72
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
