GBP/JPY drops below 166.00 on upbeat Japan’s GDP data

• GBP/JPY has surrendered the immediate support of 166.00 on higher-than-expected Japan GDP data.
• UK next PM Liz Truss has picked battle against higher energy prices and inflation.
• The BOJ has failed in accelerating household spending despite a prudent monetary policy.

The GBP/JPY pair has sensed selling pressure after failing to sustain above 166.20 in the early Tokyo session. The asset has slipped below 166.00 after the release of upbeat Japanese Gross Domestic Product (GDP) data. The Japanese GDP data has landed at 0.9%, higher than the forecasts of 0.7% and the prior release of 0.5%. Also, the annual data has improved meaningfully to 3.5% against the expectations and the prior print of 2.9% and 2.2% respectively.

This week, downbeat Japan’s Overall Household Spending data weakened the yen bulls. The economic data declined to 3.4% than the expectations of 4.2% and the prior release of 3.5%. Despite the prolonged efforts of the Bank of Japan (BOJ) in accelerating overall demand by flushing liquidity into the economy continuously, household expenditure remained vulnerable.

Earlier, the cross displayed a sheer upside move from a low of 161.00 after Liz Truss was declared the next UK Prime Minister. The announcement brought a sense of political stability to the UK economy as UK political environment was filthy after the resignation of ex-UK PM Boris Johnson. Apart from that, Truss picked a battle with accelerating energy prices and inflation rate, which strengthened the pound bulls.

Conservative party leader announced a fund of 130 billion pounds for freezing bills. Under this, the new cabinet will set a fixed unit price for energy suppliers to sell gas & electricity to households. Adding to that, household taxes will be trimmed, which will remain supportive for them to combat higher payouts. Also, the Cabinet will focus on making more investments and scaling up the employment generation process.