GBP/JPY Remains Strong Below 175.00, All Eyes On UK Jobs Data
The GBP/JPY remains strong during Tuesday's trading session and has put a stop to the recent retracement from its 2016 highs. For now, the GBP/JPY is capped below the 175.00 resistance level as traders await the UK and the US jobs data.
UK Jobs Market To Show Improvement
Looking at the UK side, the market is expecting the number of jobless claims to fall by at least 9600 during May. In addition, the unemployment rate in the UK is expected to cross 4% in April. As for the average hourly earnings, a jump is also expected here. But this will also point towards the persistent price pressure in the United Kingdom..
Overall, a positive surprise in the UK's job market will confirm the forecasts of more rate hikes from the Bank of England. After all, the BoE has the problem of high inflation on its hand, and the only tool in its arsenal is rate hikes..
Any further rate hikes from the BoE will be bullish for the Pound Sterling as well as the GBP/JPY cross..
On the other hand, the Japanese authorities are also ready to intervene in the markets if required to support the JPY. And when we consider the risks arising from the global slowdown, there's a chance that we might see a flight towards safe assets such as the JPY..
So that's yet another factor that is preventing the traders from going bullish on the GBP/JPY cross. However, the BoJ stance will remain dovish so that is also a factor that will keep a lid on the JPY gainst against the GBP. Recently, the BoJ Deputy Governor also talked about the need to continue with the ultra-easy policy to support the economy..
But once we have the jobs data from the UK and any fresh impetus from Japan, things will become more clear in the GBP/JPY..