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  • GBP/JPY looks to post modest daily gains on Tuesday.
  • Improving market mood seems to be weighing on JPY.
  • Jibun Bank Services PMI will be featured in Japanese economic docket.

The GBP/JPY closed the first day of the week virtually unchanged and stayed relatively quiet during the Asian trading hours on Tuesday. With the market improving modestly, however, the pair gained traction and rose to a daily high of 149.20 during the American session. As of writing, GBP/JPY was up 0.38% on the day at 149.15.

Risk flows help GBP gather strength

Reflecting the positive shift in sentiment, the UK’s FTSE 100 Index gained 0.38% on Tuesday. Although Wall Street’s main indexes trade little changed, the broad-based USD weakness is helping the GBP/USD pair edge higher and allowing the British pound outperform the JPY as well.

Earlier in the day, the latest Citi/YouGov inflation survey showed that the average expectations for inflation over the next 12 months in the UK edged lower to 2.9% from 3.3% but this report was largely ignored by market participants.

On Wednesday, the Jibun Bank Services PMI for February will be released from Japan ahead of the IHS Markit’s Services PMI from the UK. Additionally, British finance minister Rishi Sunak will deliver the budget statement. Nevertheless, the market reaction to these events is likely to remain muted and the risk perception could continue to drive GBP/JPY’s movements.

Technical levels to watch for

 

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