The GBPJPY exchange rate will be influenced by British GDP growth data released on Monday, following a Friday price surge.
GBPJPY – Daily Chart
GBP/JPY has jumped above the 208.20 level, which was the 2024 high. The pair now has a chance to build on the bullish momentum.
The British data release comes at 2pm HKT, with analysts expecting another 0.1% growth. That puts the economy on course for annual growth of 1.3%.
Leading UK economist Julian Jessop said the UK is actually in a technical recession, which is “usually defined as two successive quarters of negative growth”. “We’re not there yet, but in the real world, yes we’re in a recession,” he said.
The Japanese yen is now back in focus as long-term debt yields rise to record highs. Investors are starting to worry about debt levels in Japan, and the Bank of Japan’s bullish tone has not deterred them. That could lead to more talk of currency intervention from the central bank.
Yields on the benchmark ten-year yield have risen to their highest levels since August 1999. The BOJ raised interest rates to their highest level in three decades at last week’s policy meeting.
Japan’s 30-year government bond yield reached a record 3.43% on Wednesday. The latest jump in yields came after the BOJ signalled it is considering raising interest rates further, which is seen as a dramatic shift after decades of ultra-loose monetary policy. The move came after the government approved a massive $135 billion stimulus package for the economy.
Japan’s lower house agreed to finance the huge stimulus package, but more than 60 percent of the planned spending will come from government borrowing. As Japanese yields rise, institutional investors may move funds out of the country and into safer assets.
The UK economy is not delivering strong gains as consumers remain stretched from higher taxes, but the Japanese economy is seen as riskier as its debt pile rises.
