GBP/JPY Climbs as Strong UK Services PMI Fuels Pound Sterling

Pound Sterling Gains Momentum on Strong UK Services Sector Data

The GBP/JPY (British Pound/Japanese Yen) cross has experienced a notable upswing, primarily driven by positive economic data emanating from the United Kingdom. This data surpassed the solid Purchasing Managers Index (PMI) figures released in Japan, lending strength to the Pound Sterling against the Japanese Yen.

A Closer Look at the Purchasing Managers Index (PMI)

* **United Kingdom:** The UK Services PMI rose to 53.6, reinforcing expectations that the Bank of England (BoE) might pause interest rate cuts at its upcoming meeting. * **Japan:** Japanese PMIs presented a mixed picture. Manufacturing improved to 49.9, while services cooled to 52.7, suggesting a potential slowdown in economic momentum.

Impact of US Data on Market Sentiment

Market sentiment weakened slightly following strong US PMI data, which dampened expectations of Federal Reserve interest rate cuts. This development kept global investors cautious.

GBP/JPY Pair Movement Analysis

The GBP/JPY pair gained 0.34% during the North American session, reaching 198.91 after bouncing back from a daily low of 198.12. This rise reflects the strength of the Pound Sterling, supported by positive UK PMI data, which partially offset the mixed data from Japan.

Bank of England Expectations

Recent data, particularly the strong Services PMI, suggests that the Bank of England might halt its easing cycle at its upcoming September meeting. The upcoming inflation data will likely play a crucial role in shaping the Bank's decision. The central bank is carefully weighing inflation against the risk of weakening economic growth.

Technical Analysis of GBP/JPY

From a technical perspective, the GBP/JPY pair exhibits a bullish bias after rebounding from the 50-day SMA at 198.03. Furthermore, buyers pushed the pair above the 20-day SMA at 198.35, indicating an accelerating uptrend. The Relative Strength Index (RSI) also suggests that buyers are gaining momentum. Increased trading volume supports this upward trend, reflecting stronger conviction among buyers. Should GBP/JPY rise above 199.00, it could target the August 20 high of 199.44. Subsequently, the next resistance level lies at 199.50, followed by 200.00. Conversely, a daily close below 199.00 could trigger a retracement towards the 20-day SMA, provided 199.50 is cleared.

Pound Sterling Performance This Week

[Table inserted here. Can be referenced as "The table below illustrates the percentage change of the British Pound (GBP) against other major currencies this week."] The table illustrates the percentage change of the British Pound (GBP) against listed major currencies this week. The British Pound was strongest against the New Zealand Dollar. The heat map reflects changes in the exchange rates of major currencies against each other. The base currency is selected from the left column, while the quote currency is chosen from the top row. For example, if you select the British Pound from the left column and move horizontally to the US Dollar, the percentage change displayed in the box represents GBP (base)/USD (quote).