Published on Jun 12, 2023

Daily Analysis For GBP/JPY 12-06-2023

GBP/JPY Analysis

Key Points: -

· The GBP/JPY pair is maintaining modest gains, reaching its highest levels since January 2016.

· Despite mixed concerns surrounding the UK's economic growth, sellers have been reluctant to enter the market as Bank of Japan (BoJ) officials continue to support an accommodative monetary policy.

· In the bond markets, there is notable selling pressure ahead of the upcoming central bank decision.

· The downbeat Japan Producer Price Index (PPI) data further reinforces the bullish bias for the pair, with market focus shifting towards the release of UK employment data and the BoJ's monetary policy meeting.

Today's Scenario: -

The GBP/JPY pair continues to advance for the fourth consecutive day, reaching its highest levels since early 2016 during the early hours of Monday's European session. This upward movement reflects the market's recognition of the diverging monetary policies between the Bank of England (BoE) and the Bank of Japan (BoJ). The pair's mild gains are supported by firmer bond yields and preparations for significant data releases and events scheduled for this week.

Despite hawkish concerns surrounding the BoE, recent comments from policymakers, such as Catherine Mann, suggest that the UK government needs a long-term agenda to safeguard growth prospects. Additionally, the Confederation of British Industry (CBI) trade body stated that while Britain's economy appears likely to avoid recession this year, persistent challenges such as weak business investment remain unresolved.

Diagram of GBP/JPY: -

Economic Events: -

Date Event Impact Currency

4:15 (New Zealand) Electronic Retail Card Spending YoY Low NZD

4:15 (New Zealand) Electronic Retail Card Spending MoM Low NZD

5:20 (Japan) PPI YoY Low JPY

5:20 (Japan) PPI MoM Low JPY

5:31 (Ireland) Construction PMI Low EUR

10:30 (Finland) Current Account Low EUR

11:30 (Japan) Machine Tool Orders YoY Low JPY

12:30 (Slovakia) Construction Output YoY Low EUR

13:30 (China) Total Social Financing Low CNY

13:30 (China) New Yuan Loans Low CNY

13:30 (China) M2 Money Supply YoY Low CNY

13:30 (China) Outstanding Loan Growth YoY Low CNY

13:30 (Switzerland) Myfxbook USDCHF Sentiment Medium CHF

13:30 (Australia) Myfxbook AUDUSD Sentiment Medium AUD

13:30 (Japan) Myfxbook USDJPY Sentiment Medium JPY

13:30 (European Union) Myfxbook EURUSD Sentiment Medium EUR

13:30 (United Kingdom) Myfxbook GBPUSD Sentiment Medium GBP

13:30 (Canada) Myfxbook USDCAD Sentiment Medium CAD

13:30 (New Zealand) Myfxbook NZDUSD Sentiment Medium NZD

15:15 (European Union) EU Bond Auction Low EUR

15:15 (European Union) 15-Year Bond Auction Low EUR

18:30 (Ecuador) Balance of Trade Low USD

18:30 (France) 3-Month BTF Auction Low EUR

18:30 (France) 12-Month BTF Auction Low EUR

18:30 (France) 6-Month BTF Auction Low EUR

20:30 (Kosovo) Inflation Rate YoY Low EUR

20:30 (United States) Consumer Inflation Expectations Low USD

21:00 (United States) 6-Month Bill Auction Low USD

21:00 (United States) 3-Year Note Auction Low USD

22:30 (United States) 3-Month Bill Auction Low USD

22:30 (United States) 10-Year Note Auction Low USD

23:30 (United States) Monthly Budget Statement Medium USD

Buy Scenario: -

On the upside, the round figure of 180.00 and the September 2015 low near 180.30 act as barriers, restricting the pair's upward movements. Till we do not advise to buy GBP/JPY.

Sell Scenario: -

For the GBP/JPY pair, a daily close below the previous resistance line, which extends from early May and currently sits around 175.20, is crucial for a short-term pullback. However, sellers face a challenge in the form of the late 2022 peak around 173.00. Till we do not advise to sell GBP/JPY.