- GBP/JPY gains momentum around 185.08 ahead of the UK key data.
- BoE Chief Economist Huw Pill said the rates must remain at their current level to curb inflation.
- BoJ Governor Ueda stated they will exit the ultra-loose monetary policy with prudence to avoid volatility in the bond market.
- The UK Gross Domestic Product will be closely watched by traders.
The GBP/JPY cross edges higher above the 185.00 psychological mark during the Asian session on Friday. Traders await the preliminary UK Gross Domestic Product (GDP) for the third quarter (Q3). The cross is trading at 185.08 at the time of writing, gaining 0.07% on the day.
The Bank of England (BoE) Chief Economist Huw Pill said on Thursday that interest rates must remain at their current level to curb inflation, in a shift in tone from earlier in the week when he addressed probable cuts next year. However, the events in the Middle East are the main focus at the moment.
The UK Gross Domestic Product for Q3 is expected to contract 0.1% QoQ from 0.2% expansion in the previous reading. The annual growth number is expected to grow 0.5% versus 0.6% prior. If the GDP reports come in worse than expected, this might exert some selling pressure on the British Pound (GBP) and act as a headwind for the GBP/JPY cross.
Japan’s government plans to increase its fiscal loan and investment program in a proposed second extra budget to build up supply chains and other long-term investments, said Reuters on Friday.
Furthermore, BoJ Governor Kazuo Ueda said on Thursday that the BoJ will exit the ultra-loose monetary policy with prudence to avoid significant volatility in the bond market. Ueda further stated that Japan was making moves towards the central bank's 2% inflation target, with a cycle of rising wages and domestic demand-driven inflation picking up pace. Apart from this, the rising geopolitical tension in the Middle East might trigger the safe-haven flows and benefit the Japanese Yen (JPY) against the GBP.
Market participants will closely watch the UK growth numbers for fresh impetus. Also, the UK Industrial Production, Manufacturing Production, and Trade Balance for September will be released. Traders will take cues from these data and find a trading opportunity around the GBP/JPY cross.
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