GBPJPY retreats from multi-day high post-UK CPI, eyes BoE's testimony on monetary policy

The GBPJPY cross gains some positive traction for the third successive day on Wednesday and maintains its bid tone through the early European session. The cross, however, retreats a few pips from a multi-day high and slides back below the 166.00 mark following the release of UK inflation figures.

The UK Office for National Statistics reported that the headline Consumer Price Index (CPI) accelerated to 11.1% YoY in October from 10.1% recorded in the previous month. Additional details revealed that the core inflation, which excludes volatile food and energy items, rose 6.5% YoY during the reported month. The readings were higher than market estimates and adds to pressure on the Bank of England to continue raising borrowing costs.

The data, however, fails to provide any meaningful impetus to the British Pound amid worries about a deeper economic downturn. Traders also seem reluctant ahead of the BoE's Monetary Policy Report Hearings later this Wednesday. This, in turn, prompts bullish traders to lighten their bets around the GBPJPY cross. In the meantime, a recovery in the risk sentiment undermines the safe-haven Japanese Yen and could offer some support to spot prices.

The initial findings, as reported by Associated Press (AP) citing unidentified US officials, suggest that the missile that hit Poland on Tuesday may have been fired by Ukraine at an incoming Russian missile. The headlines infuse some stability in the financial markets, which, in turn, dents demand for traditional safe-haven assets, including the JPY. This, in turn, warrants some caution before placing aggressive bearish bets around the GBPJPY cross.

Technical levels to watch