GBP/JPY drifts lower past 181.50 at two-week trough on downbeat yields, UK employment eyed

• GBP/JPY prints four-day losing streak, fades bounce off multi-day low of late.
• Yields edge lower as inflation fears recede, recession woes escalate.
• BoE Governor Bailey, UK Treasurer Hunt show readiness to tame inflation with “whatever necessary”.
• BoJ officials keep defending easy monetary policy but fears of Japan meddling propel Yen.

GBP/JPY holds lower ground near 181.20, the lowest levels in 12 days, as downbeat US Treasury bond yields join fears of Japan intervention to weigh on the cross-currency pair ahead of the UK’s employment figures, scheduled for publishing on early Tuesday.

That said, the US Treasury bond yields remain pressured after reversing from the highest level since March on Monday. It should be noted that the benchmark US 10-year Treasury bond yields printed the first daily loss in July the previous day whereas the two-year counterpart declined for the second consecutive day, to respectively near 4.00% and 4.86%.

Elsewhere, UK finance minister Jeremy Hunt spoke alongside Bank of England (BoE) Governor Andrew Bailey on Monday while showing readiness to take measures to return inflation to its 2% target.  It’s worth noting that the BoE Governor Bailey tried defending the restrictive monetary policy while pushing back concerns about the UK’s economic slowdown.

It should be noted that the Bank of Japan (BoJ) officials remain dovish and hence flag fears of the GBP/JPY pair’s recovery, should the UK’s employment data manage to back the recently hawkish BoE talks.

Above all, the latest easing inflation data from the UK, US and China tame hawkish central bank concerns but the broad fears of witnessing an economic slowdown keep pushing traders toward the traditional havens, likely the Japanese Yen (JPY), Gold and the Treasury bond yields.

Moving on, the UK’s Claimant Count Change for June will join the Unemployment Rate for three months to May to direct intraday moves.

Technical analysis

A clear downside break of the 21-DMA support, around 180.00 by the press time, favors the GBP/JPY bears.