Market news

12 February 2024

GBP/JPY moves away from monthly top set on Friday, manages to hold above 188.00 mark

  • GBP/JPY fails to capitalize on its modest intraday gains to levels just above mid-188.00s.
  • Expectations for an imminent BoJ policy pivot underpin the JPY and exert some pressure.
  • Bets that the BoE will soon begin cutting interest rates further weigh on the British Pound.

The GBP/JPY cross attracts some intraday sellers following an uptick to the 188.65 area and drops to a fresh daily low during the first half of the European session on Monday. Spot prices currently trade around the 188.25-188.20 region and look to extend Friday's late pullback from the vicinity of the 189.00 round figure, or the YTD peak.

Investors seem convinced that the Bank of Japan (BoJ) will eventually pivot away from its ultra-loose monetary policy settings after the outcome of annual wage negotiations in March. This, to a larger extent, helps offset BoJ Deputy Governor Shinichi Uchida's dovish remarks on Thursday, saying that aggressive tightening is unlikely even after an exit from the negative interest rate policy and underpins the Japanese Yen (JPY). The British Pound (GBP), on the other hand, meets with some supply in the wake of reviving US Dollar (USD) demand, which, in turn, is seen as another factor exerting downward pressure on the GBP/JPY cross.

The GBP is further weighed down by growing acceptance that the Bank of England (BoE) could lower borrowing costs in the next few months. In fact, the current market pricing suggests that the UK central bank could deliver four 25 basis points (bps) interest rate cuts by the end of the year. This, in turn, suggests that the path of least resistance for the GBP/JPY cross is to the downside and supports prospects for deeper losses. Bearish traders, however, might wait for this week's key UK macro releases – starting with the jobs report on Tuesday, followed by consumer inflation figures and the prelim Q4 GDP print, on Wednesday and Thursday, respectively.

Investors will further take cues from BoE Governor Andrew Bailey's scheduled speech on Wednesday for some meaningful impetus. Hence, it will be prudent to wait for strong follow-through selling before confirming that the GBP/JPY cross has topped out in the near term and positioning for further losses.

Technical levels to watch

 

Market Focus
Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.
Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade Europe to contact me about the information I have selected.

© 2011-2024 Top Markets Solutions Ltd

This website is operated by Top Markets Solutions Ltd which is registered with the Department of Registrar of Companies and Intellectual Property of the Companies of the Republic of Cyprus as a private limited company with registration number HE272810 and is authorized by the Cyprus Securities and Exchange Commission ("CySEC") to act as a licensed Cyprus Investment Firm ("CIF") with license number 158/11. Top Markets Solutions Ltd operates in accordance with Markets in Financial Instruments Directive (MiFID).

In accordance with CySEC Circular C108, please be informed that the previous name of Top Markets Solutions Ltd was TeleTrade-DJ International Consulting Ltd.

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Top Markets Solutions Ltd ("the Company") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall the Company have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

The Company cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

The Company currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime. The Company does not provide its services to residents or nationals of the USA.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, The Company uses cookies in its web services. By continuing to browse this site you agree to our use of cookies.

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64.90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade Europe strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64.90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location