GBP/JPY bulls attack 160.00 on upbeat UK employment data, firmer sentiment
- GBP/JPY remains on the front foot for the third consecutive day.
- UK Claimant Count Change, ILO Unemployment Rate dropped below market forecasts and prior readings.
- Covid hopes join expectations of further easy money from Japan to strengthen bullish bias.
GBP/JPY extends the previous two-day rebound on strong UK employment data during the initial hour of the London open. That said, the cross-currency pair initially ticked up to 159.96 before easing to 159.75 by the press time.
The UK’s latest round of jobs report, mainly comprising the April month’s Claimant Count Change and ILO Unemployment Rate for three months to March, back the Bank of England’s (BOE) latest hawkish bias, as well as Governor Andrew Bailey’s push for faster rate hikes. That said, UK Claimant Count Change for April dropped below -38.8K forecast and -46.9K prior readouts to -56.9K. Also favoring the GBP/JPY bulls was the easy Unemployment Rate of 3.7%, compared to the 3.8% market consensus and prior.
Also read: UK: ILO Unemployment Rate declines to 3.7% in March vs. 3.8% expected
Other than the UK data, firmer sentiment and comments favoring no major challenges to the Bank of Japan’s (BOJ) money policy also keep GBP/JPY buyers hopeful. Additionally, firmer US Treasury yields act as an extra catalyst to propel the quote.
Japan’s Finance Minister Shunichi Suzuki and BOJ Deputy Governor Masayoshi Amamiya were the latest policymakers who pushed for easy money policies. Among the additional catalysts favoring the GBP/JPY bulls are the covid headlines from China, as well as recently downbeat US data and Fedspeak.
Amid these plays, the stock futures, Asia-Pacific equities and the US Treasury yields print gains but the US Dollar Index (DXY) remains pressured for the third consecutive day.
Moving ahead, GBP/JPY traders may keep their eyes on the risk catalysts and hence highlight a speech from Fed Chairman Jerome Powell, as well as Brexit news, not to forget covid updates, as the key factors to watch for fresh directions.
Technical analysis
A convergence of the previous support line from late March and the monthly resistance line highlights the 160.00 threshold as an important resistance for the GBP/JPY bulls to tackle before eyeing the driver’s seat.