When people bought GBP/JPY near 160.50 on Friday, they stopped this week’s drop from the YTD peak. Early in the European session, the cross is still up at 161.00, which means it hasn’t gone down for two days.

Because of uncertainty about how the new Bank of Japan (BoJ) Governor Kazuo Ueda will handle monetary policy, the Japanese Yen (JPY) falls across the board, which helps the GBP/JPY cross. The yield curve control easing instrument is something that investors think Ueda will get rid of. Yet, data released this week showed that the world’s third-largest economy grew more slowly than expected in the fourth quarter. This suggests that the Bank of Japan (BoJ) should keep its extremely loose monetary policy.

Even though there are predictions that the Bank of England (BoE) may be nearing the end of its rate-hiking cycle, the GBP/JPY cross is not likely to rise much.

Weaker consumer inflation numbers in the UK on Wednesday may have made it less important for the central bank to tighten monetary policy. This makes up for the fact that UK retail sales in January were better than expected, and it may stop bulls from betting.

Trade Idea

Also, a generally lower mood on the stock market because of fears of a recession helps the safe-haven JPY and keeps the GBP/JPY cross from going up. So, you should wait for some follow-through buying before setting up for the recent positive trend to continue. Spot prices are likely to go up for the first time in three weeks.