- GBP/JPY has turned sideways around 161.50 as focus shifts to UK winter energy shock fears.
- UK households are already facing the headwinds of high price pressures and lower paychecks.
- BOJ’s prudent monetary policy has failed to accelerate economic activities.
The GBP/JPY pair is juggling in a narrow range of 161.32-161.60 in the Tokyo session. The cross has turned sideways after a firmer rebound from 160.86 on Wednesday. A successful re-test of Tuesday’s low near 161.00, pushed the cross higher, however, the unavailability of a potential trigger for strengthening the asset turned it sideways.
On a broader context, the cross could surrender the pullback move as the UK economy is getting near to a recession situation amid potential energy shocks. After Russia’s invasion of Ukraine, the UK economy is facing the heat of higher price pressures led by advancing gas and power prices due to an embargo on Russian energy imports. As the winter season is near and demands more energy, an expected 80% jump in its price cap is announced by the energy regulator.
The substantial increase in price cap for energy is likely to dent further the already dented sentiment of UK households. Price pressures are already near a 40-year high and the administration has totally failed in improving the labor cost index. Now, more energy bills pressure on the households will scale down the confidence of consumers in the economy. This could have major repercussions on the sterling.
On the Tokyo front, a continuation of prudent monetary policy by the Bank of Japan (BOJ) has failed to spurt the extent of economic activities in the yen area. Japan’s Jibun Bank Manufacturing PMI has landed at 51, lower than the expectations and the prior release of 51.8 and 52.1 respectively. Also, Services PMI remained vulnerable at 49.2 from the consensus of 50.7 and the former figure of 50.3.
|Today last price
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|Daily Fibonacci 38.2%
|Daily Fibonacci 61.8%
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