The GBP/JPY cross is facing selling pressure on Tuesday, with a combination of factors contributing to the decline. Intervention fears are supporting the Japanese Yen (JPY), while a bullish US Dollar (USD) is weighing on the British Pound (GBP). The uncertainty surrounding the Bank of Japan (BoJ) and the Bank of England’s (BoE) hawkish tilt could limit losses in the GBP/JPY cross ahead of the UK jobs data release.
During the Asian session, the GBP/JPY cross saw an uptick above the 198.00 mark before reversing its gains. Currently trading around 197.00, the cross is down over 0.35% for the day, with traders awaiting the UK monthly employment data for direction. The Office for National Statistics (ONS) is expected to report an increase in the number of people claiming unemployment-related benefits and a higher jobless rate for the three months to September. Wage growth data will also be closely watched, potentially impacting the BoE’s policy decision in December and providing impetus to the GBP/JPY pair.
Speculations of Japanese intervention in the FX market to support the Yen, combined with concerns about Trump’s protectionist tariffs, are putting pressure on the GBP/JPY cross. However, a significant move in JPY appreciation is uncertain due to the BoJ’s rate-hike plans. The BoE’s hawkish stance could offer some support to the GBP, helping to limit downside movement in the cross. From a technical standpoint, the breakout above the 200-day Simple Moving Average (SMA) indicates bullish potential and suggests a possibility of dip-buying at lower levels.
One key economic indicator to watch is the Average Earnings Excluding Bonus release by the ONS, which provides insight into pay growth within the UK economy. A positive result is typically bullish for the GBP, while a lower reading is bearish. This data, along with the upcoming UK jobs report, could influence the direction of the GBP/JPY pair in the near term. Traders will be monitoring these economic indicators closely for potential trading opportunities in the currency pair.
