GBP/JPY flatlines in 163.20 area as fall in global yields post-US CPI offer yen some respite
|- GBP/JPY is currently trading flat in the 163.20 area, as a fall in global yields post-US CPI supports the yen.
- The pair wasn’t reactive to mixed UK jobs data on Tuesday, and focus now shifts to Wednesday’s UK CPI release.
GBP/JPY has stabilised in the lower-163.00s on Tuesday, after mixed UK labour market data didn’t give pound sterling much impetus, and with a pullback in global yields from recent highs in the wake of not as hot as forecast US inflation easing pressure on the yen. The pair has swung between 162.80-163.60ish and is currently trading flat on the day in the 163.20 area as the FX market focus has been more on 1) outperformance in commodity-sensitive currencies like NOK, AUD and NZD and 2) underperformance in USD post the release of US inflation figures.
Speaking of which, even though the headline rate of Consumer Price Inflation hit a new four-decade high at 8.5%, core measures of price pressures weren’t as hot as feared, leading markets to wind in some recently built-up hawkish Fed bets. As a result, US bond yields are pulling back from multi-year highs hit earlier in the day and weighing on yields in the Eurozone, UK and other developed markets.
This is handing the yield-sensitive yen some respite, with the currency having been battered by widening rate differentials in recent weeks. Looking ahead to the rest of the week, traders will be keeping an eye on whether the pullback in yields has further legs. If so, a dip back towards 162.00 is likely for GBP/JPY.
But UK CPI data is out on Wednesday and if it surprises to the upside, could be a bullish catalyst for sterling. Whether that would be enough to see the pair test March highs in the mid-164.00s is another question.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.