GBP/JPY saw a rise on Tuesday, reaching the 197.00 handle as the FX market continued to sell off the Japanese Yen. Despite UK labor figures worsening, with unemployment benefits claims rising less than expected and wages increasing, investors were not as impacted as initially feared. The Bank of Japan is believed to have intervened in the global markets recently, overspending on financial operations, but the Yen’s rebound has been short-lived as GBP/JPY climbed back towards the 197.00 handle.
The UK’s ILO Unemployment Rate increased to 4.3% over the three months ending in March, in line with market expectations. Average UK Earnings Including Bonuses rose to 5.7% compared to the previous year. However, net employment change fell by -177K jobs, temporarily impacting the GBP. Looking ahead, the focus is on Thursday’s Japanese Gross Domestic Product (GDP) growth for the first quarter, expected to contract by -0.4%.
In terms of technical analysis, GBP/JPY continues to trade above the 200-hour Exponential Moving Average, with the Sterling gaining against the Yen. While the pair has recovered towards the 197.00 handle, it remains down 1.8% from the peak reached in late April. With markets showing signs of recovery on Tuesday, Yen pairs are keeping an eye on the upcoming Japanese GDP data to gauge the impact on the currency pair.
Overall, GBP/JPY’s movement towards the 197.00 handle reflects the ongoing sell-off of the Japanese Yen in the FX market. Despite some concerns about UK labor figures, the impact was mitigated by better-than-expected data on unemployment benefits claims and wage growth. With the Bank of Japan’s intervention and the upcoming Japanese GDP data, the market sentiment around Yen pairs, including GBP/JPY, remains cautious but hopeful for further gains in the near future.
