GBP/JPY retreats further from YTD peak, slides to mid-199.00s amid notable JPY demand

GBP/JPY drifts lower as firming BoJ rate hike expectations continue to boost the JPY.
A weaker USD and upbeat data underpin the GBP and also lend support to the cross.
Fiscal concerns might cap further GBP upside and cap any attempted recovery move.

Haresh Menghani FXStreet

The GBP/JPY cross attracts some follow-through sellers during the Asian session on Tuesday and moves further away from its highest level since July 2024, around the 200.35 region touched the previous day. The intraday slide is sponsored by a broadly firmer Japanese Yen (JPY) and drags spot prices to mid-199.00s in the last hour.

The initial market reaction to news that Japan's Prime Minister Shigeru Ishiba will step down fades rather quickly amid firming expectations that the Bank of Japan (BoJ) will stick to its policy normalization path. The bets were reaffirmed by an upward revision of Japan's Q2 GDP growth figures on Monday. Moreover, a rise in Japan's household spending and positive real wages keep hopes alive for an imminent BoJ rate hike by the year-end, which boosts the JPY and weighs on the GBP/JPY cross.

The British Pound (GBP), on the other hand, benefits from the prevalent selling bias surrounding the US Dollar (USD). Adding to this, the British Retail Consortium (BRC) reported earlier today that the Like-For-Like Retail Sales rose 2.9% year-on-year in August, beating July’s 1.8% gain and market forecasts of 2%. This also marks the strongest growth in four months, which, along with the Bank of England's (BoE) cautious path of interest rate cuts, underpins the GBP and could limit losses for the GBP/JPY cross.

That said, the fiscal uncertainty ahead of the Autumn Budget in November might hold back traders from placing aggressive bullish bets around the Sterling Pound and cap any intraday move up. Nevertheless, the aforementioned fundamental backdrop makes it prudent to wait for strong follow-through selling before confirming that the GBP/JPY cross has topped out in the near-term and positioning for any meaningful corrective decline.

Economic Indicator

BRC Like-For-Like Retail Sales (YoY)

The British Retail Consortium (BRC) Like-For-Like Retail Sales measures changes in the actual value of retail sales from participating companies with invaluable management information on a regular and reliable basis. It shows the performance of the retail sector. A high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative.

AUD/USD keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold: Gains remain capped by $4,400

Gold regains composure and trades with decent gains on Friday, managing to refocus attention on the $4,440 mark per ounce troy. Therefore, the precious metal reverses Thursday’s decline as the US Dollar alternates gains with losses at the end of the week.

Ripple Price Forecast: XRP extends decline as returning ETF inflows fail to lift outlook

Ripple (XRP) falls below $1.33 on Friday, marking the third consecutive day of declines. The token continues to track the broader cryptocurrency market downturn, with investors closely monitoring heightened macroeconomic uncertainty ahead of the United States (US) Consumer Price Index (CPI) release and next week’s Federal Reserve (Fed) monetary policy decision.

Weekly focus – The hawks set the tone

Risky assets came under pressure this week as energy prices kept creeping higher and the ECB surprised the markets with a hawkish tone. The price of Brent crude touched USD 110 per barrel on Thursday night, highest since mid-May, as news emerged that the Yemeni Houthis had reached control of key port cities and islands near the Bab el-Mandeb strait.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.