GBP/JPY Remains Below 189.00 Mark, Shows Minimal Movement After Mixed UK Economic Data

• GBP/JPY sees some buying interest for the second consecutive day but lacks strong momentum.
• Uncertainty surrounding the BoJ’s upcoming policy decisions weakens the JPY and provides support.
• Mixed economic data from the UK needs to excite GBP bulls or generate significant market movement.
• The GBP/JPY pair maintains a relatively stable position below the 189.00 level after experiencing slight fluctuations following mixed economic data releases from the UK.
• GBP/JPY
• Despite an initial dip to around 188.40 on Wednesday, the pair stays afloat during the early European trading session.

The Japanese Yen faces renewed selling pressure after BoJ Governor Kazuo Ueda emphasised the central bank’s commitment to maintaining accommodative policies until the 2% inflation target is within reach. This announcement dashes hopes for an immediate policy shift, weakening the JPY and supporting the GBP/JPY pair.

Market sentiment suggests expectations that the BoJ may gradually move away from its dovish stance and eventually exit the hostile interest rate environment shortly. Positive developments related to wage increases in Japan further bolster this sentiment, potentially driving consumer spending and inflation. Despite geopolitical tensions, these factors limit the downside for the JPY and consequently influence the GBP/JPY exchange rate.

Meanwhile, the GBP receives some support from speculations that the Bank of England (BoE) might maintain relatively higher interest rates for an extended period. However, the impact of upbeat GDP data for January is overshadowed by weaker figures in the Industrial and Manufacturing Production sectors. As a result, there is minimal market reaction to the UK economic releases in terms of GBP/JPY movement.

Given the current market conditions, traders may prefer to wait for stronger buying momentum before considering significant positions, especially with next week’s upcoming BoJ monetary policy decision.

GBP/JPY