- GBP/JPY is expected to conclude its less-confident pullback ahead of BOJ Kuroda’s speech.
- Japan's central bank chief may discuss the further path of intervention in the currency market.
- UK’s GDP is seen steady at -0.1% and 2.9% on a quarterly and yearly basis.
The GBP/JPY pair displays a short-lived pullback after dropping to 148.00 in the Tokyo session. The less confident pullback has pushed the cross to near 152.00, however, the downside remains favored as an intervention of the Bank of Japan (BOJ) into the currency market has strengthened the Japanese yen against the pound.
The decision to intervene in the currency markets came after the BOJ continued its dovish stance on interest rates. BOJ Governor Haruhiko Kuroda believes that the Japanese economy needs a cushion to offset the impact of the Covid-19 pandemic. The central bank intervened in the FX moves as it believes that the current yen valuation provided by the market participants doesn’t justify the fundamentals.
Meanwhile, Japanese Finance Minister Shunichi Suzuki cited that “Recent one-sided and rapid yen moves are not desirable,” as per Reuters.
Japanese Chief Cabinet Secretary Hirokazu Matsuno is concerned about Russia’s nuclear warning and has decided to ban exports of chemical weapon-related goods to Russia as an additional sanction on Moscow’s action in Ukraine,”
Going forward, the speech from BOJ Governor Haruhiko Kuroda will be of utmost importance. Investors are expecting more insights into the path of intervention in the currency markets by the central bank to safeguard the depreciating yen.
On the UK front, a deepening energy crisis, soaring inflationary pressures, and rising interest rates without the support of economic fundamentals are weakening the pound bulls. The optimism generated by novel UK Prime Minister Liz Truss has started fading away.
Going forward, the UK Gross Domestic Product (GDP) data will remain in focus. The GDP data for the second quarter is expected to decline by 0.1% in line with the prior reading. Also, the annual GDP data will grow at a steady pace of 2.9%.
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