- GBP/JPY drifts lower for the fourth straight day and is pressured by a combination of factors.
- Expectations of a policy shift by the BoJ continue to boost the JPY and drag the cross lower.
- Bets that the BoE will cut rates in 2024 further contribute to Sterling’s underperformance.
The GBP/JPY cross remains under heavy selling pressure for the fourth successive day on Tuesday and drops to the 184.70 area during the Asian session, back closer to over a one-week low touched the previous day.
Investors now seem convinced that the Bank of Japan (BoJ) will almost certainly end its negative interest rate policy by early next year in the wake of higher inflation, which remained above the 2% target for the 18th consecutive month in September. This is seen as a key factor behind the Japanese Yen's (JPY) relative outperformance and continues to exert downward pressure on the GBP/JPY cross.
The British Pound (GBP), on the other hand, is weighed down by speculations that the Bank of England (BoE) will start cutting interest rates from their 15-year peak in the wake of looming recession risks. The bets were reaffirmed by weaker UK Retail Sales figures, which fitted with the darkening outlook for Britain's economy. This further contributes to the offered tone surrounding the GBP/JPY cross.
Even the upbeat market mood, which tends to undermine demand for the traditional safe-haven JPY, also does little to ease the bearish pressure or lend any support to spot prices. The GBP/JPY cross has now retreated over 350 pips from its highest level since November 2015, around the 188.25-188.30 region touched last week. Moreover, the lack of any buying supports prospects for further downside.
That said, the prevalent selling bias surrounding the US Dollar (USD) is seen benefitting the Sterling. This, in turn, could lend some support to the GBP/JPY cross, though the fundamental backdrop suggests that the path of least resistance is to the downside. Market participants now look forward to the BoE's Monetary Policy Report Hearings on Wednesday for some meaningful impetus.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD suffers worst decline in months, stays below 1.0900
EUR/USD lost almost a hundred pips on Thursday, having the worst day in months. The Euro lost ground across the board while the US Dollar had a mixed performance after US data pointed to softer inflation and a more balanced labor market.
GBP/USD consolidates losses around 1.2600
GBP/USD pulled back sharply on Thursday amid a stronger US Dollar supported by higher Treasury yields. The pair found support above 1.2600 and is consolidating around 1.2620.
Gold eases as investors rush away from safety
Financial markets turned optimistic after US inflation eased further in November. Speculative interest increases bets of a shift in central banks' monetary policy. XAU/USD is in a bearish corrective decline in the near term, slide should remain limited.
Kyber exploiter asks for complete control of all assets after nearly $50 million exploit
Kyber Network, a cross-chain decentralized exchange and aggregator, was hit by an exploit that drained nearly $50 million in cryptocurrencies from its liquidity pools. The exploiter contacted the team, asking them to await a statement concerning a “potential treaty.”
Salesforce rally helps Dow Jones outpace NASDAQ, S&P 500 on Thursday
Salesforce (CRM) is the main story on Thursday. The enterprise software company utilized artificial-intelligence-based (AI) integrations in its product suite to grow profits and revenue for the third quarter.