GBP/JPY oscillates in a range below 183.00, focus remains on key UK macro data on Friday

GBP/JPY lacks any firm intraday direction and remains confined in a narrow range.
The BoE’s less hawkish signals and a bleak outlook for the UK economy cap gains.
A more dovish BoJ undermine the JPY and helps limit the downside for the cross.

Haresh Menghani FXStreet

The GBP/JPY cross struggles to capitalize on its weekly gains registered over the past two days and oscillates in a narrow trading band below the 183.00 mark through the first half of the European session on Wednesday.

Traders seem reluctant to place bullish bets around the British Pound (GBP) in the wake of a bleak outlook for the UK economy, which turns out to be a key factor acting as a headwind for the GBP/JPY cross. In fact, the National Institute of Economic and Social Research (NIESR) said that it would take until the third quarter of 2024 for UK output to return to its pre-pandemic peak. In its quarterly update, the NIESR added that there was a 60% risk of the government going to the polls during a recession.

This comes after a report from the British Retail Consortium showed on Tuesday that UK Retail Sales in July registered its weakest year-on-year growth since August 2022. Adding to this, the Bank of England's (BoE) less hawkish forward guidance, signalling that the tightening cycle may be nearing an end, continues to undermine the GBP. Apart from this, the emergence of some buying around the safe-haven Japanese Yen (JPY) further contributes to capping the upside for the GBP/JPY cross.

That said, a more dovish stance adopted by the Bank of Japan (BoJ) keeps a lid on any meaningful gains for the JPY and helps limit the downside for the GBP/JPY cross. It is worth recalling that the BoJ's Summary of Opinions released on Monday revealed that policymakers backed the case for the need to patiently continue with the current monetary easing towards achieving the price stability target. Apart from this, weaker wage growth data from Japan is seen as another factor weighing on the JPY.

The government data released on Tuesday showed that real wages in Japan fell for a 15th straight month in June, while nominal pay growth also slowed. This should allow the BoJ to stick to its current easy monetary policy settings, which, in turn, supports prospects for some meaningful appreciating move for the GBP/JPY cross. Traders, however, seem reluctant and prefer to wait on the sidelines ahead of important UK macro releases, including the Prelim Q2 GDP print on Friday.

Technical levels to watch

GBP/JPY

Overview
Today last price	182.72
Today Daily Change	-0.06
Today Daily Change %	-0.03
Today daily open	182.78

Trends
Daily SMA20	181.4
Daily SMA50	180.28
Daily SMA100	174
Daily SMA200	168.36

Levels
Previous Daily High	182.96
Previous Daily Low	181.39
Previous Weekly High	183.25
Previous Weekly Low	180.46
Previous Monthly High	184.02
Previous Monthly Low	176.32
Daily Fibonacci 38.2%	182.36
Daily Fibonacci 61.8%	181.99
Daily Pivot Point S1	181.79
Daily Pivot Point S2	180.81
Daily Pivot Point S3	180.22
Daily Pivot Point R1	183.37
Daily Pivot Point R2	183.95
Daily Pivot Point R3	184.94

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

EUR/USD accelerates losses, focus is on 1.1800

EUR/USD’s selling pressure is gathering pace now, opening the door to a potential test of the key 1.1800 region sooner rather than later. The pair’s pullback comes on the back of marked gains in the US Dollar following US data releases and the publication of the FOMC Minutes later in the day.

GBP/USD turns negative near 1.3540

GBP/USD reverses its initial upside momentum and is now adding to previous declines, revisiting at the same time the 1.3540 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs just above the key $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Fed Minutes to shed light on January hold decision amid hawkish rate outlook

The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.