GBP/JPY recovers 146.00 in a flash of risk-on markets

• The GBP jumped on broad-market risk appetite on trade talks, but remains trapped by recent highs.
• JPY traders will be looking towards next week’s upcoming BoJ key meeting.

The GBP/JPY is trading into 146.35 in early Thursday trading, sticking close to the week’s highs but struggling to develop real momentum in either direction.

The Guppy is experiencing rough trading conditions, clattering into the week’s highs near 146.50 after a fast-and-loose trade agreement between the US and the European Union saw a spark of risk appetite in late Wednesday trading, but the GBP/JPY pairing remains steeply off of July’s highs near the 150.00 major handle.

In Japan, Foreign Bond Investment to July 20th saw a contraction of ¥209.2 billion, while foreign investment in Japanese stocks saw a muted addition of ¥173.5 billion, compared to the previous reported period’s ¥601.9 billion. Late Thursday  will also bring Tokyo CPI figures at 23:30 GMT, and the headline y/y Tokyo CPI for July is expected to remain steady at 0.7%, though market impact could be muted as traders begin to gear up for the Bank of Japan’s (BoJ) upcoming meeting, where traders will be looking for clues about the Japanese central bank’s current stance on monetary policy. with rumours of growing dissent within the ranks as the BoJ pursues inflationary mechanisms with mixed results, and some are beginning to call for an exit from hyper-easy policy.

GBP/JPY Levels to watch

After peaking near 150.00 earlier in the month, the Guppy is back into July’s opening prices, and bears will be looking for a strong push into major lows for the pair from 143.75, while buyers will be hoping that the recent bottom at 145.45 will serve as a springboard for clawing out more gains.