GBP/JPY surging, now on its second consecutive day of gains. In fact, it narrowly made a new recent daily high right in the final hour of this trading day. The currency pair now changes hands right above the floor of the mid-202.00s. This indicates the beginning of a recovery after a corrective decline from its peak since July 2024. Spot prices have not risen above yesterday’s overnight swing high, as traders look ahead to important macroeconomic data scheduled on the docket soon from the UK.
UK economic calendar will see the release of the monthly Gross Domestic Product (GDP) as per print. This key economic measure paints the most complete picture of all the goods and services produced in the country over a defined period of time. The Arrangement figure, also known as GDP, is produced by the Office for National Statistics and represents one of the most important indicators closely followed by analysts and traders. The month-on-month (MoM) reading contrasts economic activity this month against last month. This apples-to-apples comparison provides us with an up-close look at the country’s real economic health.
Market participants are especially jittery coming into this release. They are looking for particularly bad UK GDP to spark new GBP/JPY selling. It would only do so to the extent that it increases the chances of further interest rate reductions from the Bank of England. These cuts would likely bear heavily on the British Pound (GBP) and its performance against the Japanese Yen (JPY).
Market participants adopting a negative stance will probably wait on the sidelines before placing fresh bets on GBP/JPY. They’d like to see weakness hold below 201.50 first. This likely reflects a wait-and-see approach, as they want to see more proof of downward momentum in the currency pair. Any GBP/JPY weakness itself would eventually call in more selling pressure, making the GBP/JPY picture more difficult for traders.
So long as GBP/JPY continues to trade above the mid-202.00s, a bullish outcome is possible, but the sentiment is mixed. The upward direction we experienced the last two days is a great sign! Nonetheless, traders are remaining cautious for any swift changes in the economic outlook as a result of tomorrow’s UK GDP data release.