GBP/JPY Plummets Ahead of US ISM Manufacturing PMI Release: BoJ Rate Hikes Postponed?
GBP/JPY breaks its winning streak, trading at 191.80 as caution looms over the US ISM Manufacturing PMI release. Weak Japanese manufacturing data sparks speculation of BoJ rate hike delays, challenging the JPY.
Japan allocates ¥989 billion for energy subsidies amidst rising costs, potentially fueling inflation. BoJ’s hawkish stance strengthens with Tokyo’s inflation rise and increased capital spending by Japanese companies.
UK’s BRC Like-for-Like Retail Sales rose by 0.8% YoY in August, fastest in 5 months. Pound Sterling gains as BoE unlikely to cut rates in September, but 87.2% chance of 25 bps cut in November.
Traders anticipate BoE Deputy Governor Sarah Breeden’s role at a joint conference by the ECB and EBA on supervisory cooperation. Stay tuned for market updates!
Analysis:
High inflation boosts a country’s currency value, leading to potential rate hikes. Conversely, lower inflation weakens a currency. Central banks raise rates to combat inflation, attracting more capital inflows. Gold loses value in high inflation due to increased opportunity cost. Lower inflation is positive for Gold as it brings down interest rates, making it a viable investment option.