GBP/JPY is facing downward pressure as Japan’s economic growth raises expectations of a rate hike by the Bank of Japan (BoJ). The recent growth in Japan’s GDP has strengthened the Japanese Yen (JPY) and increased the likelihood of a near-term interest rate adjustment by the BoJ, leading to a decline in the GBP/JPY cross.
On the other hand, the improved risk sentiment following US Retail Sales has provided support to the risk-sensitive GBP. The positive data from the US has alleviated concerns about a potential recession and boosted the risk-on mood in the market, which could limit the downside of GBP/JPY.
Additionally, positive economic data from the UK, including GDP figures, has supported the British Pound. The UK economy expanded as expected in the second quarter, with GDP increasing both quarter-on-quarter and year-on-year.
Traders are now looking ahead to the release of UK Retail Sales data, with expectations of a month-on-month increase in July. The forecasted growth in retail sales could further support the Pound Sterling and impact the GBP/JPY cross.
Analysis and Breakdown:
The recent economic growth in Japan and the potential rate hike by the BoJ have put downward pressure on GBP/JPY. However, positive data from the US and the UK have provided support to the Pound Sterling, limiting the downside of the currency pair. Traders are now focusing on the upcoming UK Retail Sales data, which could further influence GBP/JPY. Understanding these factors can help individuals make informed decisions about their finances and investments.