- GBP/JPY attracts strong follow-through buyers for the fourth straight day amid a weaker JPY.
- The mostly upbeat UK macro data boosts the cross and contributes to the intraday strength.
- The divergent BoJ-BoE policy outlook might keep a lid on any further appreciating move.
The GBP/JPY cross builds on this week's goodish recovery move from the vicinity of the 187.00 mark, or its lowest level since September 2024, and gains some follow-through positive traction for the fourth straight day on Thursday. Spot prices stick to intraday gains following the release of mostly upbeat UK macro data, though remain below the 193.00 mark through the early European session.
The UK Office for National Statistics reported that the economy unexpectedly grew 0.1% QoQ in the three months to December 2024 after recording zero growth in the previous quarter. Adding to this, the UK GDP expanded 1.4% year-on-year (YoY) in Q4 vs. 1.1% expected and 1.0% (upwardly revised from 0.9%) growth in Q3. Other data showed that Industrial Production and Manufacturing Production in the UK increased 0.5% and 0.7%, respectively, in December, both surpassing estimates. This, in turn, provides a modest lift to the British Pound (GBP), which, along with a mostly weaker Japanese Yen (JPY), continues to push the GBP/JPY cross higher.
Investors remain worried about the potential economic fallout from US President Donald Trump's new levies on commodity imports and reciprocal tariffs. Apart from this, a generally positive tone around the equity markets turns out to be a key factor undermining the safe-haven JPY. However, bets that the Bank of Japan (BoJ) will hike interest rates further, bolstered by Japan's strong Producer Price Index (PPI) released earlier today, might hold back the JPY bears from placing aggressive bets. Apart from this, the Bank of England's (BoE) gloomy outlook could keep a lid on any further appreciating move for the GBP/JPY cross.
In fact, the UK central bank last week halved its 2025 economic growth forecast from 1.5% to 0.75%. Adding to this, BoE Governor Andrew Bailey told reporters that the central bank expects to make further rate cuts this year. Hence, strong follow-through buying is needed to confirm that the GBP/JPY cross has formed a near-term bottom around the 187.00 mark.
(This story was corrected on February 13 at 13:00 GMT to say that UK GDP grew 1.4% YoY in Q4 compared to 1.0% in Q3, not 0.9%, and GBP/JPY attracts strong follow-through buyers for the fourth straight day, not the third.)
Economic Indicator
Gross Domestic Product (QoQ)
The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Last release: Thu Feb 13, 2025 07:00 (Prel)
Frequency: Quarterly
Actual: 0.1%
Consensus: -0.1%
Previous: 0%
Source: Office for National Statistics
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