- GBP/JPY sees a notable drop to around 199.30 following Japan’s positive GDP report.
- The Japanese economy expanded by 0.3%, exceeding the anticipated 0.1% growth.
- The Bank of England is likely to continue its cautious approach to monetary policy.
During the Asian trading session on Friday, the GBP/JPY currency pair fell by 0.3%, approaching 199.30. This drop came after the release of unexpectedly strong Japanese GDP figures, which boosted the yen’s strength.
Earlier today, the Japanese Cabinet Office announced a 0.3% GDP growth, bouncing back from a flat performance in the previous quarter. This exceeded economists’ forecasts, which had pegged growth at a mere 0.1%. Year-on-year, the economy showed a 1% growth, recovering from a contraction of 0.2% last quarter.
This positive economic data has sparked speculation about potential interest rate hikes from the Bank of Japan (BOJ). U.S. Treasury Secretary Scott Bescent mentioned that the BOJ is lagging and may need to tighten its monetary policies further.
On the other hand, the British pound seems to be positioned with expectations that the Bank of England (BOE) will adhere to its “gradual and prudent” monetary easing approach, even as rising inflation alongside improved Q2 GDP data alleviates some labor market concerns.
The GBP/JPY pair continues to experience selling pressure as it nears the psychological threshold of 200.00. However, the trend appears bullish in the short term, with the 100-day exponential moving average (EMA) hovering around 195.95.
The 14-day relative strength index (RSI) is currently struggling to break above 60. If it does manage to surpass this level, it could signal a new wave of bullish momentum.
Looking ahead, this pair may reach for the highs of 203.16 and 204.23 in the near term. Conversely, should the price dip below 190.33, it could expose further downside towards the lows of 188.80 from March and a significant low of 187.00 from February.
GBP/JPY Daily Chart
Earlier releases indicated positive economic indicators like GDP, providing a measure of Japan’s economic activity over a defined period. The current reading of 0.3% surpassed expectations of 0.1% and marked an improvement from a previous reading of 0%.
