GBP/JPY nudges higher amid BoJ’s cautious outlook, mixed UK jobs report

• GBP/JPY up as BoJ's Ueda's cautious view weakens Yen.
• UK jobs disappoint, and higher unemployment and lower wages hurt the Pound, as peculation on BoE rate cuts increased.
• BoE Bailey: Central banks need to evaluate how restrictive rates need to be.

The GBP/JP/registered modest gains of 0.29% in the mid-North American session after Bank of Japan (BoJ) Governor Kazuo Ueda's speech weakened the Japanese Yen on cautious remarks. Despite that, the Pound Sterling was capped by a softer-than-expected UK employment report. The pair exchanged hands at 168.72 after hitting a daily low of 187.97.

BoJ Governor’s Ueda remarks and UK employment data, weighed on the JPY

During the Asian session, BoJ Kazuo Ueda said the economy is recovering modestly and still shows signs of weakness following weak data releases. Ueda acknowledged that consumption of food and daily necessities is weakening as prices climb. He added that household spending is improving moderately and is awaiting higher wages.

BoJ Governor Ueda failed to provide forward guidance regarding ending negative rates. According to Bloomberg, sources said the BoJ is considering increasing borrowing costs in March, though the outcome of the decision is still too close to call between the March and April meetings.

Lately, Bank of England Governor Andrew Bailey has been making headlines by saying that major central banks need to question how restrictive their policy is and how long it needs to stay put. Bailey added that policy is doing its job and noted that inflation expectations are well anchored.

On the data front, the latest jobs data in the UK witnessed a jump in the unemployment rate, from 3.6% to 3.9% YoY, as 21,000 jobs were cut from the workforce. Wage growth slid from 6.2% to 6.1% in the last quarter of 2023, said the Office for National Statistics (ONS). After the data, markets increased bets on a BoE rate cut in June, though the first fully priced-in rate cut is expected in August.

GBP/JPY Price Analysis: Technical outlook

The daily chart portrays the pair as neutral to upward biased, and if buyers achieve a daily close above the March 11 open of 189.14, that could open the door for further upside. In that case, the next resistance level is seen at the Tenkan Sen at 189.57, followed by the 190.00 psychological level. On the flip side, the first support would be the 50-day moving average (DMA) at 187.84, followed by the February 8 low of 186.86.