GBP/JPY corrects to near 204.00 as Yen outperforms, UK CPI data awaited

GBP/JPY retraces to near 204.00 as the Japanese Yen outperforms its peers.
BoJ Governor Ueda is scheduled to meet key government ministers to discuss monetary policy and economic outlook.
The UK’s inflation is expected to have decelerated in October.

Sagar Dua FXStreet

The GBP/JPY pair retraces to near 204.00 in the Asian trading session on Wednesday after revisiting an almost six-week high around 204.80 the previous day. The pair faces selling pressure as the Japanese Yen (JPY) attracts bids after underperforming its peers in the past few weeks.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.03%	0.05%	-0.09%	0.12%	0.44%	0.57%	0.05%
EUR	0.03%		0.08%	-0.07%	0.16%	0.47%	0.56%	0.09%
GBP	-0.05%	-0.08%		-0.14%	0.07%	0.39%	0.50%	-0.03%
JPY	0.09%	0.07%	0.14%		0.24%	0.55%	0.65%	0.13%
CAD	-0.12%	-0.16%	-0.07%	-0.24%		0.31%	0.41%	-0.10%
AUD	-0.44%	-0.47%	-0.39%	-0.55%	-0.31%		0.11%	-0.39%
NZD	-0.57%	-0.56%	-0.50%	-0.65%	-0.41%	-0.11%		-0.53%
CHF	-0.05%	-0.09%	0.03%	-0.13%	0.10%	0.39%	0.53%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

The outlook of the Japanese Yen remains uncertain as traders pare bids supporting more interest rate hikes by the Bank of Japan (BoJ) in the near term, assuming that the central bank will align monetary policy with fiscal objectives.

Japan’s new leader Sanae Takaichi is expected to follow principals of former Prime Minister Shinzo Abe’s principals, which favored higher fiscal spending and lower taxes.

In Wednesday’s session, investors will focus on the BoJ Governor Kazuo Ueda’s meeting with key government ministers on Wednesday, including Finance Minister (FM) Satsuki Katayama.

Meanwhile, the Pound Sterling (GBP) trades cautiously ahead of the United Kingdom (UK) Consumer Price Index (CPI) data for October, which will be published at 07:00 GMT. Investors will pay close attention to the UK inflation data as it is expected to influence market expectations for the Bank of England’s (BoE) monetary policy outlook.

The Office for National Statistics (ONS) is expected to show that the headline inflation grew at a moderate pace of 3.6% on an annualized basis, slower than September’s reading of 3.8%. In the same period, the core CPI – which excludes volatile items such as food, energy, alcohol, and tobacco – decelerated to 3.4% from the prior reading of 3.5%.

Economic Indicator

Consumer Price Index (YoY)

The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Why it matters to traders?

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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