GBP/JPY plunges on softer-than-anticipated UK Inflation report

GBP/JPY shifts on backfoot after soft UK Inflation report.
The BoE may continue with its restrictive policy stance as UK has highest inflation among western economies.
This week, UK Retail Sales and Japan’s National CPI data will be keenly watched.

Sagar Dua FXStreet

The GBP/JPY pair faced a sharp sell-off after the release of the softer-than-projected United Kingdom Consumer Price Index (CPI) report for November. The UK Office for National Statistics (ONS) reported that monthly headline inflation witnessed a de-growth by 0.2% while investors projected a growth of 0.1%. In October, the economic data remained stagnant. The annual headline and core inflation decelerated significantly to 3.9% and 5.1% respectively.

A sharp decline in the UK inflation has resulted in a sigh of relief for Bank of England (BoE) policymakers but chances for the central bank keeping interest rates in a restrictive territory for a longer period than other central bankers are high. In spite of a significant fall in price pressures in November, inflation in the UK region is highest in comparison with other western economies.

On Tuesday, BoE Deputy Governor Sarah Breeden emphasized on keeping policy in a restrictive manner to keep price pressures in check but said "I have no pre-determined policy path in mind," when asked about guidance on interest rates.

After the inflation hangover, investors will focus on the UK Retail Sales data for November, which will be published on Friday. Monthly Retail Sales data is seen expanding by 0.4% against a contraction of 0.3%.

On the Tokyo front, the Japanese Yen is broadly under pressure as roadmap about exiting from ultra-dovish monetary policy was missing in commentary of Bank of Japan (BoJ) Governor Kazuo Ueda in his monetary policy statement. The BoJ kept interest rates unchanged in the negative trajectory as anticipated.

Going forward, investors will focus on the National CPI data for November, which will be published on Friday.

GBP/JPY

Overview
Today last price	181.69
Today Daily Change	-1.40
Today Daily Change %	-0.76
Today daily open	183.09

Trends
Daily SMA20	184.51
Daily SMA50	184.22
Daily SMA100	183.78
Daily SMA200	178.38

Levels
Previous Daily High	184.18
Previous Daily Low	180.05
Previous Weekly High	184.33
Previous Weekly Low	178.35
Previous Monthly High	188.67
Previous Monthly Low	182.75
Daily Fibonacci 38.2%	182.6
Daily Fibonacci 61.8%	181.63
Daily Pivot Point S1	180.7
Daily Pivot Point S2	178.3
Daily Pivot Point S3	176.56
Daily Pivot Point R1	184.83
Daily Pivot Point R2	186.57
Daily Pivot Point R3	188.96

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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