- GBP/JPY wobbles inside 15-pips trading range after refreshing the multi-month top.
- Tokyo CPI recovered in May, Unemployment Rate rose during April.
- UK policymakers confirm rising risk of Indian covid variant, BOE’s Vlieghe amplifies tapering bets.
- Risk catalysts, US inflation data and Treasury yields will be important to follow.
GBP/JPY bulls take a breather around 156.00 after jumping the most since November 2020 the previous day. In doing so, the risk-barometer justifies the market’s cautious sentiment ahead of the key US inflation figures as well as mixed signals concerning Brexit and central bank actions in the UK as well as Japan. Also, the recently flashed data from Japan adds to the pair’s indecision.
Japan’s May month’s Tokyo Consumer Price Index (CPI) recovered from -0.8% forecast and -0.6% previous readouts to -0.4% whereas Unemployment Rate in April jumped past 2.6% prior and 2.7% market consensus to 2.8%. It’s worth mentioning that the pair shrugs of the data as bulls await a strong push to the north to keep the latest jump.
GBP/JPY rallied the most in seven months the previous day after the Bank of England (BoE) policymaker Gertjan Vlieghe signaled a rate hike in 2022 should the job market bounces back faster than expected. Also on the positive side were chatters of more stimulus from Japan and the US, which in turn favored the risk-on mood and cut safe-haven demands of the Japanese yen (JPY).
Alternatively, UK PM Boris Johnson and Health Minister Matt Hancock defended the government’s action during the pandemic after ex-aide alleged the policymakers of the slow and chaotic initial response to the coronavirus (COVID-19) outbreak, which ultimately led to many deaths.
It’s worth mentioning that the Brexit chaos and the covid woes in Japan are an extra burden on the sentiment, other than reflation woes and pre-data caution. Even so, S&P 500 Futures rise 0.40% by the press time.
Moving on, GBP/JPY traders will need to rely on the risk catalysts, mainly the covid and inflation headlines for fresh impulse. However, the bulls are likely to keep the reins.
Technical analysis
Unless declining below an ascending trend line from early April, near 155.20, GBP/JPY bulls can keep aiming for the year 2018 top near 156.60.