- GBP/JPY attracts recent sellers on Tuesday and is under pressure from a confluence of factors.
- Intervention fears underpin JPY while bullish USD continues to weigh on GBP.
- BoJ uncertainty and BoE’s hawkish stance may limit losses ahead of UK jobs data.
The GBP/JPY cross rate meets recent supply after the Asian session rose to levels just above 198.00 and reverses most of the previous day’s upward move. Spot prices are currently trading around 197.00, down more than 0.35% on the day, as investors look forward to monthly UK employment data gaining fresh impetus.
The Office for National Statistics (ONS) is expected to report that the number of people applying for unemployment benefits increased from 27,900 in October to 27,900. to 30.5 thousand, and the unemployment rate increased slightly to 4.1% in the three months preceding September. Investors will also pay particular attention to data on wage dynamics, which may influence expectations regarding the December decision of the Bank of England (BoE). This, in turn, will provide a significant boost to the British Pound (GBP) and the GBP/JPY cross.
Meanwhile, speculation that Japanese authorities may intervene in the foreign exchange market to support the domestic currency, along with concerns about U.S. President-elect Donald Trump’s protectionist tariffs, are strengthening the Japanese yen (JPY) and putting pressure on spot prices. However, any significant move towards JPY appreciation seems elusive due to uncertainty about the Bank of Japan’s (BoJ) interest rate hike plans. Additionally, the BoE’s hawkish tilt could provide support for GBP and assist limit the negative impact on GBP/JPY.
Even from a technical perspective, the recent break above the all-important 200-day uncomplicated moving average (SMA) favors bullish investors and supports the prospects for dip-buying at lower levels. This further makes it prudent to wait for robust follow-up selling before confirming that the GBP/JPY cross rate has peaked and setting itself up for a deeper corrective decline in the near future.
Economic indicator
Average earnings without bonuses (3 months/year)
The publication of average earnings excluding bonuses is a key short-term indicator of changes in pay levels in the UK economy; it is issued by the UK Office for National Statistics. This can be seen as a measure of the raise in “basic pay”. Generally speaking, a positive reading is seen as bullish for the pound sterling (GBP), while a low reading is seen as bearish.
