- GBP/JPY retreats from 181.00 as recession fears in the UK economy deepen.
- BoE policymakers may get puzzled between recession and persistent inflation fears.
- Japan’s inflation remains above 2% for the 20th month in a row.
The GBP/JPY pair fell back while attempting to climb above 181.00 after the United Kingdom Office for National Statistics (ONS), in its latest estimates, reported a contraction in the Q3 Gross Domestic Product (GDP). The ONS projected a stagnant performance in the preliminary estimates and now a surprise contraction has deepened fears of a technical recession in the UK economy.
In the latest Summary of Projections (SOP), the Bank of England (BoE) forecasted a stagnant growth for the last quarter of 2024. Any unfavourable number would be considered as a technical recession. The Bank of England (BoE) policymakers are in dilemma whether to endorse rate cuts to avoid a technical recession or stay focused with restrictive policy stance to ensure return of inflation to 2%.
Meanwhile, stronger-than-projected Retail Sales data for November has delivered a reason to BoE policymakers to lean towards maintaining interest rates elevated.
The ONS reported that the consumer spending momentum grew at a stronger pace of 1.3% against estimates of 0.4%. In October, Retail Sales were stagnant. Annual Retail Sales surprisingly rose by 0.1% while investors forecasted a contraction by 1.3% due to heavy demand at non-food retail stores amid heavy discount due to Black Friday event. This has restored persistent inflation fears.
On the Tokyo front, Bank of Japan’s (BoJ) monetary policy minutes indicated that members agreed to sustain interest rates negative till the achievement of 2% inflation through wage growth gets clear. Apart from that, National Consumer Price Index (CPI) data for November, released in early Friday, decelerated to 2.8% against the former reading of 3.3%. Price pressures in the Japanese economy have remained above 2% for 20 straight months.
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 holds above 1.0400 in quiet trading
EUR/USD trades in positive territory above 1.0400 in the American session on Friday. The absence of fundamental drivers and thin trading conditions on the holiday-shortened week make it difficult for the pair to gather directional momentum.
GBP/USD recovers above 1.2550 following earlier decline
GBP/USD regains its traction and trades above 1.2550 after declining toward 1.2500 earlier in the day. Nevertheless, the cautious market mood limits the pair's upside as trading volumes remain low following the Christmas break.
Gold declines below $2,620, erases weekly gains
Gold edges lower in the second half of the day and trades below $2,620, looking to end the week marginally lower. Although the cautious market mood helps XAU/USD hold its ground, growing expectations for a less-dovish Fed policy outlook caps the pair's upside.
Bitcoin misses Santa rally even as on-chain metrics show signs of price recovery
Bitcoin (BTC) price hovers around $97,000 on Friday, erasing most of the gains from earlier this week, as the largest cryptocurrency missed the so-called Santa Claus rally, the increase in prices prior to and immediately following Christmas Day.
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.