The GBPJPY exchange rate has jumped after the UK government budget and now targets the 208.00 price level.
GBPJPY – Weekly Chart
The latest rise in the GBP/JPY is now nearing the 208 resistance level, and that will be an important level in the days and weeks ahead.
UK Chancellor Rachel Reeves announced the latest budget on Wednesday, with the expected tax hikes looking to raise $34.4bn by 2030.
The budget had been seen as a “make or break” moment for the UK’s governing party, which has struggled in the polls this year. It started badly for the government, after the country’s Office for Budget Responsibility (OBR) published its own economic outlook two hours before the announcement.
The government has now broken its election pledge not to raise taxes, but it has sottthed bond markets for the time being. Traders will now look to future growth and spending data to see how the process is developing.
Japan’s bond market has had its own problems recently, with the country seeking to issue $73.5 billion in new bonds to fund stimulus measures. The move came despite record tax revenue and will see an 11.5 trillion yen stimulus package, which is well above the 6.7 trillion yen delivered to the previous Prime Minister, Shigeru Ishiba.
The latest spending increase also brings problems further down the road if the country’s growth slows. Friday morning will bring inflation data from Japan, with consumer prices expected to dip to 2.7% from 2.8% when released on Friday.
Markets are using the latest news to show a more positive outlook for the British pound, against a worrying trend for Japan’s bond outlook. Longer-term government bond yields reached their highest level in more than two decades this month as investors expected a spending boost for the government.
