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  • GBP/JPY holds onto previous day’s recovery moves at a lesser pace.
  • Japan’s inflation figures came in mixed for April, risk-on mood stays on the table.
  • Peace in Gaza, upbeat US data and Japan’s push for faster vaccination favor trading sentiment.
  • Preliminary activity numbers for May will be the key, as well as risk catalysts.

GBP/JPY stays positive for the second consecutive day, up 0.07% intraday around 154.50, amid the initial hour of Tokyo open. The quote benefited from the recovery in market sentiment the previous day before recently cheering mixed data from Japan. However, cautious mood ahead of the key UK economics probes the bulls of late.

Japan’s National Consumer Price Index (CPI) matches -0.4% YoY forecast versus -0.2% prior but CPI ex Food, Energy dropped below +0.5% expected to -0.2%, compared to +0.3% previous readouts. Additionally, first readings of Jibun Bank Manufacturing PMI for May also slipped below 53.6 prior and 53.8 forecast to 52.5 for May.

It should, however, be noted that S&P 500 Futures and Nikkei 225 both print mild gains by the press time and portray risk-on mood.

While upbeat US Jobless Claims and Gaza ceasefire could be spotted as the major catalysts for the recent market optimism, Japan’s push for faster jabbing, via escalating measures to approve Moderna and AstraZeneca covid vaccine, also back the risk-on mood. Furthermore, the recently easing coronavirus (COVID-19) numbers from Asia and hopes of further relief measures by the US President Joe Biden and team, not to forget the UK’s optimism over unlock measures, add to the market’s positive sentiment.

On the contrary, Brexit risks and indecisiveness of the US Federal Reserve (Fed) over the next move tame the optimists.

Looking forward, UK Retail Sales for April, expected to jump by 36.8% versus 7.2% prior, will be an immediate catalyst for the GBP/JPY traders ahead of the preliminary PMI data for May. Forecasts suggest, the headline UK Services PMI to rise from 61 to 62 whereas the Manufacturing PMI could ease to 60.00 from 60.9 prior.

Even if the scheduled data flash mixed signals, the UK’s comparative advantage over taming the COVID-19 versus Japan can keep GBP/JPY buyers hopeful.

Technical analysis

GBP/JPY remains sidelined between 154.85 and 153.50 with bullish MACD suggesting near-term strength in bullish trading momentum.


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