In the European session on Wednesday, the GBP/JPY currency pair lost its recovery momentum and dropped below the 159.00 range. The resurgence of the yen ahead of the Japan Updates.

Investors appear to be reassessing the Bank of England’s (BOE) rate outlook after the poor PMI data from the UK highlighted a considerable loss of momentum in the private sector’s business activity. In its most recent policy statement, the central bank cautioned about the risks of a recession in 2022. As a result, worsening economic conditions may push the central bank to take a cautious approach to additional tightening measures.

The increased yen strength impacts GBP/JPY and the British pound’s poor performance.

The Japanese yen has strengthened against the US dollar due to positive Jibun bank Purchase Managers Index (PMI) data issued on Tuesday. The Manufacturing PMI came in at 53.2, beating expectations of 52, while the Services PMI came in at 51.7, exceeding expectations of 50.6.

The Bank of Japan (BOJ) has continued to advocate for a conservative monetary policy to boost aggregate demand. Investors should expect additional quantitative easing because the economy still needs to recover its pre-pandemic growth levels.

Moreover, Statistics Bureau will release the Tokyo Consumer Price Index on May 26, 2022. Analysts predict that it might exceed 2.7% to 2.5% in May.

CPI measures changes in purchasing trends. Generally, a high reading is positive.

Conclusion

The GBP/JPY pair’s price uncertainty cannot portray the true image of its market, whereas this month has some upcoming good news that might push the price up.