GBP/JPY hesitates above 185.00 with bulls losing steam

Sterling’s rebound from the 184.50 area has been capped right above 185.00. The pair is moving without a clear direction on Tuesday, with risk aversion weighing on the Pound, and the bullish momentum witnessed in early January losing steam.

Unemployment claims increase and wages slow down in the UK

Earlier today, the UK employment report increased negative pressure on the GBP/. Unemployment claims increased at their fastest rate since June, while earnings increased by 6.5% year-on-year, below the 6.8% expected and well below last month's 7.2% increment.

These figures suggest that the labour market might be weakening, which would ease inflationary pressures, ultimately allowing the BoE to bring rate cuts to the table.

In Japan, last week’s figures showed lower inflationary pressure, anticipating a weak CPI reading later this week. This eases pressure on the BoJ to exit its ultra-loose policy which is keeping the Pound from a deeper reversal.

From a technical perspective, the broader trend remains bullish, with the immediate price action trapped within a horizontal range. Resistances are 186.15 and 187.55.  Supports lie at 184.50 and 182.70.

(This story was corrected on January 16 at 10:58 GMT to say that the pair's levels are at 184.50 and 185.00 levels, not 148.50 and 145.00, respectively.)

Technical levels to watch