GBP/JPY shoots above 166.00 as yen weakens amid higher energy prices

• GBP/JPY has surpassed the resistance of 166.00 as the pound strengthens on higher CPI.
• Higher energy bills are widening Japan's fiscal deficit.
• Japan's National CPI is seen at 1.3% against the prior print of 0.9%.

The GBP/JPY pair is witnessing a bullish open test-drive session on Tuesday amid broader weakness in the Japanese yen. The pair is advancing firmly in Tuesday’s session and has overstepped the round level resistance of 166.00. Although the momentum oscillators have turned extremely overbought, the pound bulls have shown no signs of exhaustion yet.

The Japanese yen is displaying broader weakness in the Fx domain as the rising oil prices have started widening the fiscal deficit in Japan’s economy. Japan is a leading importer of oil and other necessary commodities. Therefore, a serious jump in the prices of fossil fuels is hurting the yen. This week, the release of Japan’s National Consumer Prices Index (CPI) will be a major trigger for the cross. The Statistics Bureau of Japan is expected to release the yearly CPI at 1.3%, higher than the prior print of 0.9%. Despite, higher inflation expectations, the Bank of Japan (BOJ) is likely to keep the policy rates unchanged as the growth rate of Japan has yet not reached its pre-pandemic levels.

Meanwhile, the pound bulls are dominating amid the rising odds of a fourth-rate hike by the Bank of England (BOE) in May. A higher UK inflation print at 7% is compelling for more interest rate hikes. This week, UK’s GfK Group Consumer Confidence will remain in focus. A preliminary estimate for the Consumer Confidence is -33 against the prior print of -31.