- GBP/JPY depreciates on news about BoJ to lift negative interest rates in March’s meeting.
- UK Chancellor Jeremy Hunt is anticipated to announce a reduction in national insurance contributions.
- Traders will observe the S&P Global/CIPS Construction PMI for February on Wednesday.
GBP/JPY depreciates to near 190.10 during the early European hours on Wednesday. The Japanese Yen (JPY) received a boost after reports from Jiji Press suggested that some attendees of the upcoming Bank of Japan (BoJ) policy meeting on March 19 may advocate for "lifting negative interest rates," which undermines the GBP/JPY cross.
BoJ Governor Kazuo Ueda has expressed skepticism about the sustainability of Japanese inflation reaching the 2% target. With the unexpected possibility of a recession, the BoJ may delay its plans for monetary policy tightening. According to Reuters, an unnamed source indicates that the BoJ is likely to maintain its forecast for a moderate economic recovery but may revise its assessment of consumption and factory output at the March meeting.
The release of data on Tuesday indicated a rebound in the Tokyo Consumer Price Index (CPI) from a 22-month low in February. This development has reignited discussions about the possibility of the Bank of Japan (BoJ) exiting the negative interest rates regime, which in turn has provided a boost to the Japanese Yen.
The Pound Sterling (GBP) strengthens in anticipation of the UK Chancellor Jeremy Hunt's Budget Report scheduled for Wednesday. Hunt is expected to present the government's fiscal agenda, detailing tax and spending plans. There is speculation that he may announce a reduction in national insurance contributions for employees, similar to the 2p reduction announced in the autumn statement.
UK’s BRC Like-For-Like Retail Sales (YoY) for February disappointed, registering a figure of 1.0%, below the anticipated 1.6%. This contrasts with the previous period's 1.4%. Later today, the S&P Global/CIPS Construction PMI for February will be observed by traders to gain insights into the UK's economic activity.
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