The GBP/JPY cross edges lower during the Asian session on Thursday and moves further away from an over two-week high, around the 203.55-203.60 region, touched the previous day. Spot prices, however, lack follow-through selling and recover a few pips from sub-203.00 levels, or the daily low.
The Japanese Yen (JPY) attracts some buyers following Bank of Japan (BoJ) Governor Kazuo Ueda’s comments, saying that the underlying inflation is gradually accelerating toward the 2% goal. Adding to this, Japanese Finance Minister Satsuki Katayama’s warning on currency movements fuels speculation fears and turns out to be another factor undermining the JPY, which, in turn, is seen exerting some pressure on the GBP/JPY cross.
Traders, however, remain uncertain about the BoJ’s policy tightening plan amid Japan’s Prime Minister Sanae Takaichi’s pro-stimulus stance and her preference for interest rates to stay low. This, along with the underlying bullish sentiment across the global financial markets, keeps a lid on any meaningful appreciating move for the safe-haven JPY and offers some support to the GBP/JPY cross, warranting caution for bearish traders.
Meanwhile, the British Pound (GBP) continues with its relative underperformance on the back of bets for a Bank of England (BoE) interest rate cut next month. Apart from this, concerns about the UK’s fiscal situation favor the GBP bears, which, in turn, should cap the upside for the GBP/JPY cross. Traders now look forward to the UK data dump, including the Preliminary Q3 GDP growth figures, for short-term opportunities.
Economic Indicator
Gross Domestic Product (MoM)
The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The MoM reading compares economic activity in the reference month to the previous month. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
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