The GBP/JPY Has Reached A Multi-Year High, Exceeding 185.00 Due To Robust UK Wage Growth Data

The GBP/JPY pair has reached a new high not seen since December 2015 after the release of UK employment data. Bullish traders are now looking to push the momentum beyond the psychological barrier of 185.00.

The ILO Unemployment Rate unexpectedly increased to 4.2% in the three months before June, up from 4% in the previous month, according to the UK Office for National Statistics (ONS). Additionally, compared to the predicted fall of 7.3 K, the number of people requesting unemployment benefits increased by 29 K in July. The reading for June, however, was changed from 25.7K to 16.2K. Despite this, the British Pound and the GBP/JPY pair have benefited from strong wage growth figures.

In the three months leading up to June, British annual pay excluding bonuses was 7.8% higher than the previous year, the highest annual rate since records began in 2001. Wages including bonuses also accelerated to 8.2%, the fastest in ONS data excluding the period affected by the coronavirus pandemic when government job subsidies distorted the data. This has raised concerns about long-term inflation that might prompt the Bank of England (BoE) to continue raising interest rates, despite the potential risks of a looming recession.

The Bank of Japan (BoJ) stands out among major central banks for maintaining a negative benchmark interest rate as part of its ultra-loose monetary policy. This, along with stable performance in equity markets, is believed to weaken the safe-haven Japanese Yen (JPY) and contribute to the continued upward trend of the GBP/JPY exchange rate.

Despite a positive Japanese GDP report released today, investors remain optimistic. The preliminary government data showed that the Japanese economy expanded by 1.5% during the April-June period, with an annualized growth of 6.0%, compared to the anticipated 3.1% and 2.7% in the previous quarter. This marks the third consecutive quarter of expansion.

Despite this positive news, the differing monetary policy approaches taken by the BoE and BoJ suggest that the GBP/JPY exchange rate will continue to rise.

As a result, any significant downward movement is likely to be quickly bought up.

GBP/JPY Long (Buy)
Enter At: 185.318
T.P_1: 186.446
T.P_2: 187.179
T.P_3: 188.137
T.P_4: 188.845
T.P_5: 189.844
S.L: 183.580


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