The GBP/JPY has just broken above the 200.00 mark for first time since July 2024. The pounds has been boosted by a hawkish BoE rate cut last week, and mixed UK data underpins, while rising global yields and rallying equity markets are undermining the low-yielding Japanese yen.
With the pair now above the 200.00 level, the key question now is whether the breakout will hold. Assuming it does, we could see a continuation of the rally towards the 202.00 level, which is now the next big resistance above here. Interim resistance comes in at 201.00 level.
In terms of support 199.00 is a clear support level, marking the high from the day before and the middle trend of the bullish channel, which the pair has just reclaimed. Below that? 197.50 is the next stop in the event we see a sudden drop.
UK wages fall more than expected
Earlier today, we had some mixed data from the UK following last week’s Bank of England rate cut, which was a very close call when policymakers were sharply divided but ultimately agreed to cut rates.
Today’s data showed average earnings increased by 4.6% in the three months to June compared to a year ago — weaker than the 5.0% rise we saw the previous month. On the jobs front, employment has now fallen eight times in the past nine months. However, the latest drop of 8,000 jobs is the smallest decline so far, suggesting the labour market may be stabilising.
A weakening jobs market could ease wage inflation pressures and open the door to further rate cuts, but whether this happens at November’s meeting remains uncertain following that hawkish cut last week, meaning the chance of another cut in November is now lower.
Meanwhile, a UK data dump is scheduled for Thursday when we will have Q2 GDP as well as monthly data on construction output, manufacturing production and a few other indicators to look forward to. The odds of a further BoE rate cut this year will continue to tumble in the event we see stronger data from the UK this week.
By Fawad Razaqzada, market analyst with FOREX.com
With the pair now above the 200.00 level, the key question now is whether the breakout will hold. Assuming it does, we could see a continuation of the rally towards the 202.00 level, which is now the next big resistance above here. Interim resistance comes in at 201.00 level.
In terms of support 199.00 is a clear support level, marking the high from the day before and the middle trend of the bullish channel, which the pair has just reclaimed. Below that? 197.50 is the next stop in the event we see a sudden drop.
UK wages fall more than expected
Earlier today, we had some mixed data from the UK following last week’s Bank of England rate cut, which was a very close call when policymakers were sharply divided but ultimately agreed to cut rates.
Today’s data showed average earnings increased by 4.6% in the three months to June compared to a year ago — weaker than the 5.0% rise we saw the previous month. On the jobs front, employment has now fallen eight times in the past nine months. However, the latest drop of 8,000 jobs is the smallest decline so far, suggesting the labour market may be stabilising.
A weakening jobs market could ease wage inflation pressures and open the door to further rate cuts, but whether this happens at November’s meeting remains uncertain following that hawkish cut last week, meaning the chance of another cut in November is now lower.
Meanwhile, a UK data dump is scheduled for Thursday when we will have Q2 GDP as well as monthly data on construction output, manufacturing production and a few other indicators to look forward to. The odds of a further BoE rate cut this year will continue to tumble in the event we see stronger data from the UK this week.
By Fawad Razaqzada, market analyst with FOREX.com
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.