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With rates rising, the GBP/JPY continues to recover to 164.00, and focus shifts to Downing Street

Alina Haynes

Jul 08, 2022 11:30

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GBP/JPY maintains its gains from the previous day at about 163.60 during the opening hour of Friday's Tokyo trading session. The cross-currency pair recently celebrated declining political unrest in Downing Street, rising US Treasury rates, as well as the depreciation of the US dollar, recalling buyers during the dull Asian session.

 

The day before, under intense pressure from his cabinet and many resignations, UK Prime Minister Boris Johnson finally announced his resignation as leader of the UK Conservative Party. The rebels are relieved by the action, and it ensures little political damage. The risk-taking nature is still being challenged by the search for a replacement and a novice cabinet with numerous new appointees, though.

 

The day before, risk aversion also diminished as well-known figures repeated previous pronouncements in an effort to allay concerns about a recession. News regarding China and conflicting statistics from the United States also helped the market.

 

According to Bloomberg, China will raise $220 billion through unprecedented bond sales as stimulus. Officials from the United States and China will meet in person after their most recent video session, the same source states. Analysts, on the other hand, are less thrilled. Beijing is hoping that by fixing the supply-chain dilemma, it would be able to help the United States mitigate its inflation problem.

 

Notably, the GBP/JPY pair is able to maintain its strength due to the recently reduced Japan Current Account balance for May, which was 128.4 billion vs the expected 185.6 billion. The market's expectation of today's US jobs report and the broad dollar slide may also be cited as reasons driving up the price of the pair recently.

 

These transactions result in a resumption of the rising trend in US Treasury rates and a higher closing price for Wall Street benchmarks. But as of the time of publication, S&P 500 Futures are slightly down.

 

GBP/JPY traders should monitor UK politics and Brexit news, as well as economic worries, for fresh inspiration.

 

GBP/JPY buyers are propelled toward a two-week-old resistance line around 164.15 at the latest if there is a clear break over the 50-day simple moving average, which is currently at 162.85 at the time of publishing.


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