GBP/JPY recovers from sub-155.50 session lows above 156.00 mark ahead of busy week By Frank_Macro GBPJPY BOE BOJ
GBP/JPY looks set to end the day lower around 156.00, but has recovered well from earlier sub-155.50 lows.
Next week is s busy one for the pair, with the BoJ setting policy and plenty of tier one UK data releases.rate hike chatter and safe-haven demand amid choppy/mixed trading conditions in US equity markets helped to propel the yen to the top of the G10 performance table on Friday. Though strong UK GDP and Industrial Production figures helped GBP hold its ground fairly well, it wasn’t enough to overcome the yen’s advances, with GBP/JPY on course to end the day about 0.
That puts the pair on course to lose about 0.5% on the week, but GBP/JPY’s recovery from earlier sub-155.50 session lows is notable. For technicians, however, the key test will be whether the pair can close above the 156.00 level, which has acted as an important level of both resistance and support in recent weeks. A close to the north of this level could put GBP/JPY on a better footing heading into next week, a week full of important fundamental drivers for both the yen and sterling.
Starting with the former, the BoJ will decide on monetary policy on Monday. Sources a few weeks ago suggested that the bank will upgrade its inflation forecasts amid higher-than-expected wholesale and energy price pressures lifting inflation expectations in the country. But those same sources added that this lift to the inflation forecasts wouldn’t be nearly enough to spur policy action from the bank.
This suggests some hawkish risk going into Monday’s meeting which could further underpin the yen. Japanese December Consumer Price Inflation data will then be released later in the week . GBP/JPY traders will also be keeping a keen eye on next week’s UK labour market, December Consumer Price Inflation and December Retail Sales figures, which are likely to influence the BoE’s upcoming monetary policy decision on 3 February.
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