GBP/JPY struggles to find acceptance above 203.00 and retreats slightly from YTD top
- GBP/JPY attracts some sellers following an intraday uptick to a fresh YTD high on Tuesday.
- The upbeat Household Spending data from Japan supports the JPY and weighs on the cross.
- Bets that Takaichi's policies could delay BoJ rate hikes might cap the JPY and support the pair.
The GBP/JPY cross struggles to capitalize on its modest Asian session uptick and retreats from a fresh year-to-date peak – levels just above the 203.00 mark – touched earlier this Tuesday. `Spot prices, however, lack bearish conviction and currently trade just above mid-202.00s, down less than 0.10% for the day.
The Japanese Yen (JPY) continues with its relative underperformance amid an unexpected result from Japan’s leadership contest on Saturday, which positions Sanae Takaichi to become the first female Prime Minister. Takaichi is viewed as fiscally dovish and is expected to oppose any further monetary tightening by the Bank of Japan (BoJ). This, along with the underlying bullish tone, is seen undermining the safe-haven JPY and acting as a tailwind for the GBP/JPY cross.
Meanwhile, government data released earlier today showed that Japan's Household Spending rose at a faster pace than expected in August. This backs the case for a further policy tightening by the BoJ and help limit deeper JPY losses. The British Pound (GBP), on the other hand, is pressured by a modest US Dollar (USD) uptick and concerns over the UK’s fiscal outlook ahead of the Autumn budget in November. This, in turn, exerts pressure on the GBP/JPY cross.
Meanwhile, money markets are betting the Bank of England (BoE) will keep interest rates on hold for the rest of this year amid signs of faster inflation and a more resilient economy. This, along with the uncertainty over the likely timing and pace of rate hikes by the BoJ, 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.
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.21% | -0.17% | 0.66% | -0.06% | -0.40% | -0.12% | -0.09% | |
| EUR | -0.21% | -0.48% | 0.37% | -0.30% | -0.64% | -0.37% | -0.33% | |
| GBP | 0.17% | 0.48% | 0.95% | 0.18% | -0.16% | 0.12% | 0.15% | |
| JPY | -0.66% | -0.37% | -0.95% | -0.67% | -1.10% | -0.85% | -0.79% | |
| CAD | 0.06% | 0.30% | -0.18% | 0.67% | -0.29% | -0.06% | -0.03% | |
| AUD | 0.40% | 0.64% | 0.16% | 1.10% | 0.29% | 0.28% | 0.31% | |
| NZD | 0.12% | 0.37% | -0.12% | 0.85% | 0.06% | -0.28% | 0.03% | |
| CHF | 0.09% | 0.33% | -0.15% | 0.79% | 0.03% | -0.31% | -0.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
