GBPJPY steadies below 169.00 as BOE fails to impress bond buyers, market optimism fades
- GBPJPY fades two-day uptrend, remains sidelined of late.
- BOE witnessed a dim response of the first gilt sale, optimism surrounding UK’s fiscal policy fades.
- UK businesses fear gloomy Christmas amid inflation woes.
- Yields remain firmer as recession looms, China’s covid numbers escalate during a sluggish session.
GBPJPY treads water around 168.80, pausing the two-day uptrend, heading into Tuesday’s London open. In doing so, the cross-currency pair portrays the market’s indecision amid mixed clues and a lack of major data/events.
It should, however, be noted that a dim response to the Bank of England’s (BOE) first medium-term gilt selling operation seem to have teased the pair bears of late.
On the same line was the recent survey for Barclays that suggest British businesses fear a gloomy Christmas ahead, as almost half of households plan to cut festive spending due to the soaring cost of living and sales are already falling sharply in inflation-adjusted terms.
Furthermore, GBPJPY’s inaction could be linked to news suggesting that the UK Chancellor Jeremy Hunt is set to announce a new tax raid on inheritance, per the UK Telegraph. The news also mentioned that Chancellor Hunt and Prime Minister (PM) Rishi Sunak are understood to have agreed to freeze the threshold above which people must pay tax for another two years.
Alternatively, chatters over likely positive outcomes from the next fiscal plan and UK Prime Minister (PM) Rishi Sunak’s efforts to justify his election keep the pair buyers hopeful. UK PM Sunak is poised to announce a major gas deal with America after the Cop27 climate change summit, The Telegraph can disclose. “Talks about the “energy security partnership” are in their final stages, with the US planning to sell billions of cubic meters of Liquefied Natural Gas (LNG) to Britain over the coming year,” the news adds.
It’s worth mentioning that the Bank of Japan’s (BOJ) bond-buying operations and fears surrounding China’s higher covid counts since April, as well as a light calendar, restrict the GBPJPY pair’s moves.
Moving on, a lack of major data/events could keep the quote sidelined but optimism surrounding the UK’s fiscal policies may allow the cross-currency pair to remain firmer ahead of the UK’s Gross Domestic Product (GDP) for the third quarter (Q3), up for publishing on Friday.
Technical analysis
GBPJPY bulls attack the 10-DMA hurdle surrounding 169.00 but the bearish MACD signals and steady RSI keeps sellers hopeful.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
