GBP/JPY retakes 162.00 and beyond, snaps a two-day losing streak back closer to weekly low

• GBP/JPY attracts some dip-buying on Friday and snaps a two-day losing streak.
• BoJ Governor candidate Ueda's dovish remarks weigh on JPY and lend support.
• Bets for additional BoE rate hikes underpin the GBP and also act as a tailwind.

The GBP/JPY cross attracts some buyers in the vicinity of the weekly low, around the 161.20 region on Friday and refreshes the daily top during the early European session. Currently placed comfortably above the 162.00 mark, the cross snaps a two-day losing streak and stalls its recent pullback from the 100-day SMA, or a two-month high touched on Tuesday.

The Japanese Yen (JPY) weakens across the board in reaction to dovish remarks by the incoming Bank of Japan (BoJ) Governor Kazuo Ueda and turns out to be a key factor lending support to the GBP/JPY cross. Addressing the parliament for the first time since his nomination, Ueda said that the central bank must maintain the ultra-loose policy stance to support the fragile economy. He also added that the current monetary policy is a necessary and appropriate means to steadily meet the central bank's 2% target.

Justifying his outlook, Ueda noted that the recent rise in consumer inflation was driven mostly by surging import costs of raw materials, rather than strong domestic demand. This overshadows data showing that Japan's nationwide core CPI accelerated to 4.2% in January - marking the fastest rise since September 1981 - and weighs on the domestic currency. Apart from this, rising bets for additional rate hikes by the Bank of England (BoE) underpin the British Pound and boost the GBP/JPY cross.

The UK PMIs released on Tuesday indicated that business activity rose more than expected in February. This, in turn, raised hopes that the country may be able to avoid a steep economic downturn and could persuade the BoE to continue tightening its monetary policy to tame inflation. That said, worries about economic headwinds stemming from rapidly rising borrowing costs, along with geopolitical tensions, benefit the JPY's relative safe-haven status and might cap the GBP/JPY cross, at least for now.

Technical levels to watch