The GBPJPY was 0.30% lower despite Japanese inflation printing at 0%. The figures come ahead of the latest meeting of the Bank of Japan, where policymakers will give their latest inflation forecasts.
Investors are happy to give the Yen a pass on deflation for now with the rest of the world’s economies suffering some deflationary headwinds, but the latest release may spur action from the BOJ, especially with a new Prime Minister in charge. Yosihide Suga will want to stamp his authority on the economic recovery and be seen to be taking taking action. However, one of the new leader’s reforms is a planned lowering of mobile phone fees, which would hint that inflation is not his chief concern.
Bloomberg economist Yuki Masujima said of the inflation picture:
“Another negative reading on core inflation would unlikely have significant implications for the Bank of Japan’s policy meeting in late October, given the central bank’s current focus on corporate funding support.”
The pound also failed to get a lift from better-than-expected retail sales figures with the year-on-year number for September coming in at 4.7 versus 3.7 in August. This marks the fifth consecutive month of higher retail sales and shows resilience in the U.K. consumer outlook.
GBPJPY Technical Outlook
The GBPJPY found resistance at the 50-day moving average and closed lower. This set up today’s losses and a bearish close today could be the start of a correction. With the double top setup it is likely to test 135.80 with 134.00 being key support. A stop can be placed above the moving average. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.