- GBP/JPY recovers intraday losses despite slippage in Japan’s Unemployment Rate at 2.6%.
- Soaring inflation in the UK is demanding one more rate hike by the BOE.
- The BOJ is likely to maintain a neutral stance in its monetary policy statement on Thursday.
The GBP/JPY pair is highly expected to display an open rejection-reversion session. The pair opened at 163.21, witnessed some selling pressure but bounced back later after printing a low of 162.30 and has now overstepped the opening price. The cross has formed a double-bottom chart formation on a lower timeframe and is indicating a bullish reversal.
The asset has rebounded despite the release of a lower-than-expected Unemployment Rate of 2.6%. The Statistics Bureau of Japan has reported the Unemployment Rate at 2.6%, lower than the forecast and prior print of 2.7%. An improvement in Japan’s labor market has failed to cheer the Japanese yen, which has eventually underpinned the sterling. In a broader sense, the ultra-loose monetary policy by the Bank of Japan (BOJ) has resulted in an intense sell-off in the Japanese yen in the past few trading weeks.
Meanwhile, the pound bulls are strengthening on expectations of a fourth rate hike by the Bank of England (BOE) in May. Soaring inflation in the pound area is compelling for more hawkish monetary policy announcements by BOE Governor Andrew Bailey.
Going forward, investors will focus on the interest rate decision announcement by the BOJ on Thursday. BOJ policymakers are likely to keep a neutral stance considering the lower inflation rate and the requirement of massive stimulus to spurt the growth rate.
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