GBP/JPY Shows Resilience After UK Consumer Inflation Data Release
- GBP/JPY recovers early lost ground following the release of the UK consumer inflation figures.
- The headline UK CPI held steady at 2.2%, while the core CPI accelerated to the 3.6% YoY rate.
- The upside remains capped as traders await the BoE and the BoJ monetary policy meetings.
Key Highlights
The GBP/JPY cross attracts some dip-buyers following an intraday slide to the 185.80 area and climbs to the top end of its daily range during the first half of the European session on Wednesday. Spot prices currently trade around the 187.25-187.30 region, just below a one-week high touched on Tuesday. However, caution is advised due to the upcoming central bank meetings.
Impact of UK CPI Report
The British Pound (GBP) surged after the release of the UK Consumer Price Index (CPI) report, indicating that the Bank of England (BoE) may maintain interest rates. The core CPI (excluding volatile items) rose to 3.6% YoY in August, supporting the Pound’s strength. The UK August Services CPI inflation also increased, suggesting a slower rate-cutting cycle compared to the US and Eurozone.
Market Expectations
The BoE’s decision is eagerly awaited, with minimal expectations of a rate cut. The focus will then shift to the Bank of Japan (BoJ) policy update, influencing demand for the Japanese Yen (JPY) and determining the GBP/JPY cross’s direction.
Technical Analysis
While a near-term bottom may have formed around 183.70-183.75, a sustained buying momentum is crucial for further upside. The GBP/JPY cross faces resistance ahead of the central bank meetings, signaling a temporary pause in its recent rally.
Economic Indicator
Core Consumer Price Index (YoY)
The United Kingdom (UK) Core Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, measures consumer price inflation. The YoY reading compares prices to a year earlier, excluding volatile components. A high reading is bullish for the Pound Sterling (GBP), while a low reading is bearish.