GBP/JPY Trades Near 184.00 After US Bond Yields Slump
The GBP/JPY cross is trading close to the 184.00 support zone which highlights that the market mood is cautious ahead of the high-intensity economic releases. In addition, the treasure bond yields also turned lower, which has raised the chances of BoJ intervention.
With this backdrop, it makes sense for the GBP/JPY to be defensive near the 184.00 level, as the cross trades near 184.15 right now. With the 2-day long Jackson Symposium about to start, investors will be paying close attention to what happens at the event.
Since the cross also contains the GBP, we can't ignore the data coming out of the UK as well. From the UK's side, we have the PMI, which has increased the chances of a recession. At the same time, the US treasury yield is down, which can also affect the Japanese central bank.
UK PMI Reading For August Is 42.5
The S&P Global has issued the PMI UK's reading for August which reveals that it went lower and touched the 42.5 level. Last month's reading of 45.3 is a significant step-down and highlights that the UK is facing some serious problems.
On Japan's side, the PMI from the Jibun Bank showed an improvement in August as the value is around 49.7. At the same time, the Services PMI from Japan also jumped higher to around 54.3, while last month's figure was 53.8.
As mentioned earlier, the 10-year US bond's yield has experienced a major drop in the last few days which tells us that the market's mood is really cautious right now.
Last, but not least, the BoE is showing signs that it may deviate from its extra-hawkish stance. On the contrary, the BoJ is giving hope to the public that it might move away from its current accommodation policy. So, if we take that into account, it makes sense for the GBP/JPY to favor the downtrend as opposed to the upside.
On the chart of GBP/JPY, there's a rising wedge in the making which suggests that the chances of a bearish trend are highly likely.