- GBP/JPY was set to gain for the fourth session in a row on Wednesday despite risk aversion, but failed to hold above 162.00.
- Rising global yields continue to undermine the yen, but subdued jitters from the BoE may limit GBP/JPY’s further upside potential.
The GBP/JPY was set to rise for a fourth straight session on Wednesday as the uptrend in global yields continued, preventing the yen from benefiting from safe-haven inflows as US stock markets fell amid concerns on the aggressive Fed. The pair at one point rallied as high as 162.20, but has since pulled back to 161.80, paring around 0.2% of today’s gains.
That leaves GBP/JPY trading 0.7% higher on the week, with the pair finding decent buying interest when it briefly broke below 160.00 at the end of last week. While the general trend towards higher yields globally is likely to keep the pair supported, FX strategists are unconvinced how much the GBP/JPY pair can lift given the increasingly dovish-sounding BoE.
Indeed, the bank’s deputy governor, Jon Cunliffe, was on the wires earlier in the week downplaying expectations of stubbornly high inflation, while increasing his warnings about the UK’s economic weakness. GBP/JPY rose despite these dovish comments, probably because they came as no surprise given that Cunliffe had been the only dissenter against a rate hike at the last BoE meeting.
A speech by BoE Chief Economist Huw Pill on Thursday (13:15 BST), who has been one of the bank’s more aggressive members in the past, will be a closely watched event. The BoE moderated its tone on the need for further monetary tightening at its last meeting and Pill is likely to reflect this more cautious view. That could dampen GBP/JPY’s prospects for lasting momentum above 162.00, a task made even more difficult if stocks continue their current slide.
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
