GBPJPY rebounds from 165.00 despite gloomy projections due to UK recession
- The GBPJPY detected fresh demand around 165.10 on expectations of the BOJ’s repeated intervention plans.
- The recessionary situation in the United Kingdom will last two years longer than that observed during the period of the global financial crisis.
- A firmer rally in USDJPY could lead to a repeat of the BOJ’s FX intervention.
The GBPJPY pair picked up strong offers after testing Thursday’s low around 165.10 at the start of the Tokyo session. The crossover was supported despite headwinds from risk impulse and the deepening recession in the UK. The risky mood extends its period as S&P500 futures continued their bearish momentum in the Tokyo session.
The asset detected fresh demand around 165.10 despite the gloomy growth outlook for the UK economy due to a recessionary situation. In the Bank of England (BOE) monetary policy announcement on Thursday, the BOE Governor confirmed that the UK economy is in recession and that the situation will potentially last two years longer than that seen during the period. of the subprime crisis.
The BOE governor raised interest rates by 75 basis points (bps) for the first time since 1989, as inflationary pressures stabilized above the double digits and hurt the economic outlook. A weaker economic outlook has left less room for further rate hikes, as a similar attempt would result in significant jobless numbers and claims that could dampen the economic situation.
On the Tokyo front, investors are concerned about renewed tension between Japan and North Korea after North Korea fired an unidentified ballistic missile at Japan, as broadcast by NHK. As a safety precaution, the Japanese administration warned residents to take cover from missile threats. Apart from that, a firmer bounce in the USDJPY pair sparked expectations for repeated Bank of Japan (BOJ) intervention to support the Japanese Yen against outright volatility.