GBP/JPY establishes below 160.00 as investors await UK GDP
|- GBP/JPY has tumbled to near 159.00 on an expectation of mixed UK GDP.
- The quarterly and yearly GDP is seen at 1% and 9% vs. 1.3% and 6.6% respectively.
- On the Japanese front, PPI numbers are due next week.
The GBP/JPY pair is consolidating in a narrow range of 158.91-159.31 after a serious drop from 161.31 in the New York session. The cross failed to sustain above 161.00 and tumbled sharply to a low of 158.83. The sheer downside move in the cross is expected to drag it lower to near the crucial support at 157.70.
A preliminary estimate for the quarterly UK Gross Domestic Product (GDP) is 1% against the prior print of 1.3% while the yearly UK GDP may land at 9%, higher than the former figure of 6.6%. The expectation of underperformance from the quarterly UK GDP is denting the demand for sterling in the FX domain.
The renewed fears of recession after the statement from Bank of England (BOE) Governor Andrew Bailey brought a sell-off in pound over the past few trading sessions. Apart from that, BOE’s bailey dictated that the UK inflation could reach 10% by 2023.
Meanwhile, the value buying structure is strengthening the Japanese yen against sterling. Also, the ongoing risk-off impulse has improved the appeal of safe-haven assets. Going forward, yen bulls will be impacted by the release of the Japan Producer Price Index (PPI), which is due on Monday. Japan's PPI is seen at 0.3% and 9.7% on a monthly and yearly basis.
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