The GBP/JPY cross saw a fresh wave of selling following an uptick during the Asian session, which briefly pushed prices above the 198.00 mark. As of the early European session, the pair has reversed much of the previous day’s gains, trading around 197.00, down over 0.35% on the day. Traders are now looking ahead to the release of UK employment data for fresh direction.
UK Employment Data in Focus
The UK’s Office for National Statistics (ONS) is expected to report a rise in unemployment-related benefit claims to 30.5K in October, up from 27.9K in the previous month. Additionally, the jobless rate for the three months to September is forecast to edge higher to 4.1%. Investors will also be closely watching the wage growth figures, which could influence expectations around the Bank of England‘s (BoE) December policy decision. Strong wage growth would reinforce the BoE’s hawkish stance, supporting the British Pound (GBP) and potentially providing a boost to the GBP/JPY cross.
Japanese Yen Supported by Intervention Fears and Trump Tariffs
Meanwhile, the Japanese Yen (JPY) is underpinned by growing speculation that Japanese authorities may intervene in the foreign exchange market to curb excessive weakness. Additionally, fears about the potential impact of US President-Elect Donald Trump’s protectionist trade policies, including tariffs, continue to support the Yen. However, any significant rally in the JPY seems unlikely in the near term, given the ongoing uncertainty surrounding the Bank of Japan‘s (BoJ) monetary policy, particularly regarding potential interest rate hikes.
While the Yen is supported by intervention fears and global trade concerns, it struggles to make substantial gains against the GBP, as the BoE’s hawkish stance offers some support to the Pound.
Technical Outlook: GBP/JPY Holds Above Key SMA
From a technical standpoint, the GBP/JPY cross remains supported by a recent breakout above the critical 200-day Simple Moving Average (SMA), which favors bullish traders. The pair’s dip to the 197.00 area could attract buying interest, with traders looking for potential dip-buying opportunities. The 200-day SMA continues to act as a key support level, and further downside may require strong follow-through selling to confirm a top and trigger a deeper corrective move.
The immediate resistance for the pair remains near the 198.00 level, followed by the psychological 200.00 mark. On the downside, key support is seen at 196.50 and 195.80, with the 200-day SMA providing additional support around 195.00.
As traders await the UK employment report and further signals from the BoE, the GBP/JPY cross is likely to remain volatile, with the potential for sharp moves depending on the data releases.
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