GBPJPY rebounds from 164.00 as UK Employment data hogs limelight
|- GBPJPY has sensed buying interest around 164.00 amid hawkish BOE bets.
- The UK administration may postpone investment tax breaks that induce private-sector capital spending.
- Efforts to achieve price stability will continue for 18 months to two years.
The GBPJPY pair has picked demand around 164.00 in the Tokyo session after facing barricades around the 165.00 hurdle. The cross is displaying signs of exhaustion in the downside momentum post four bearish trading sessions’ spell.
After mixed UK Gross Domestic Product (GDP) figures released on Friday, investors are shifting their focus toward the payrolls data due on Tuesday. The annual GDP data jumped to 2.4% vs. the projection of 2.1%. While the monthly growth figure contracted by 0.6% against 0.4% contraction as expected.
This week, the UK Office for National Statistics may report a significant decline in Claimant Count Change by 12.6k against an increment of 25k reported earlier. The catalyst that will be critical for households will be the Average Earnings data, which is seen stable at 6%. Inflationary pressures in the UK economy have not displayed signs of exhaustion yet, and subdued earnings may not offset inflated payouts comfortably.
Meanwhile, hawkish Bank of England (BOE) bets have escalated as BOE Governor Andrew Bailey clarified on Friday, “more increases to interest rates likely in the coming months.” The UK central bank is also expecting “Efforts to bring inflation under control are likely to take between 18 months and two years.”
On the taxation reforms front, UK Chancellor Jeremy Hunt is looking to postpone UK Prime Minister Rishi Sunak’s plan of investment tax breaks till Spring. The administration may initially focus on filling the GBP 60bln financial hole through tax rises and spending cuts.
This week, the Japanese yen will be mentored by the Gross Domestic Product (GDP) data, which will release on Tuesday. The growth rate is seen lower at 0.3% vs. the prior release of 0.9% on a quarterly basis while the annualized figure may decline to 1.1% from the former release of 3.5%.
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