GBP/JPY trades below src82.00 on Monday, seeing more than 0.40% losses.
UK PMI surveys fueled dovish bets on the BoE amid worries about the British economy’s health.
Japan reported solid PMIs; still, markets bet on a dovish BoJ.
Starting the week, the GBPJPY pair is trading lower near src8src.35, though it has maintained relatively stable levels since mid-June. On the one hand, Japan reported solid PMIs in July, while the British ones came in weak sparkling dovish bets on the Bank of England, which decreased local yields, applying selling pressure on the GBP.
The British PMI monthly Composite Reports from July on Manufacturing and Services, released by S&P Global, all came lower than expected and sparked worries about the UK’s economic health. The manufacturing index slid to 45, while the Services and Global Composite fell to 52.4 and 5src.5. As a reaction, the Bank of England’s (BoE) tightening expectations have fallen, with the odds of a 50 basis point (bps) decreasing to around 35% according to the World Interest Rate (WIRP) tool. Looking forward, 25 bps hikes are priced in for September and November, but the odds of a final hike in February 2024 slid to 35%.
Due to dovish bets on the BoE, British yields are falling. The 2-year yield fell nearly src% to 4.88% while the 5 and src0-year rates to 4.3src% and 4.22%, respectively, with similar declines of nearly src%.
On the other hand, the Jibun Bank Services PMI released by Markit Economics remained steady at 52.src, while the Manufacturing Index fell slightly to 49.4. That said, markets are getting mixed signals ahead of Friday’s Bank of Japan (BoJ) decision. Governor Kazuo Ueda stated that a dovish interest rate policy should be maintained, while Japan’s top currency diplomat, Masato Kanda, stated that inflation surpassing expectations should make the bank consider a policy pivot. Still, the consensus is that the BoJ will steady its dovish stance.
GBP/JPY levels to watch
The daily chart shows strong bearish momentum for the short term. The RSI (Relative Strength Index) is in positive territory, with a sharp negative slope approaching the midline. Meanwhile, the MACD (Moving Average Convergence Divergence) prints soft red bars.
Resistance levels: src82.05 (20-day Simple Moving Average), src83.00, src84.00.
Support levels: src80.00. src79.50, src79.00.
GBP/JPY daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Comments are closed