- GBP/JPY is marching towards 163.00 on expectations of a dovish BoJ policy.
- According to a Reuters poll, the BoJ will tweak its YCC in April-June.
- It is expected that UK’s Manufacturing sector has contracted in January.
The GBP/JPY pair has witnessed a mild correction after a perpendicular upside move to near 162.80 in the early Asian session. The cross is approaching the critical resistance of 163.00 as investors are expecting the maintenance of ultra-loose monetary policy by the Bank of Japan (BoJ), which is scheduled for Friday.
BoJ Governor Nominee Kazuo Ueda has already confirmed that current inflationary pressures in Japan are backed by higher import prices. Japan’s labor cost index is still struggling to get on its feet and contribute to overall inflation. Also, domestic demand is insufficient to fuel the Consumer Price Index (CPI). Therefore, BoJ Ueda favored for the continuation of expansionary monetary policy.
The last monetary policy dictation by BoJ Governor Haruhiko Kuroda is expected to have an absence of a roadmap for an exit from prolonged easy policy.
According to a Reuters poll, April’s monetary policy, the first one by BoJ Ueda will be full of surprises. A Reuters poll indicates BoJ will start unwinding its ultra-easy policy in April. Also, the market participants are expecting further tweaks in the Yield Curve Control (YCC) in April-June.
Going forward, Japan’s Gross Domestic Product (GDP) (Q4) data will be keenly watched. The quarterly GDP is expected to remain steady at 0.2%. While the annualized figure is expected to improve to 0.8% from the former release of 0.6%.
On the United Kingdom front, investors are awaiting the release of the manufacturing sector data, scheduled for Friday. Monthly Manufacturing production (Jan) is expected to contract by 0.1% and the Industrial Production is seen contracting by 0.2% in the same period.
Dovish commentary from Bank of England (BoE) policy maker Swati Dhingra could put the Pound Sterling on the tenterhooks. BoE Dhingra has warned against further interest rate increases by citing “Overtightening poses a more material risk at this point.” She further added, “Many tightening effects are yet to fully take hold.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.