GBP/JPY soars as hot US inflation weakens Yen

• GBP/JPY jumps 1.22% after hot US CPI lifts dollar, pressures yen.
• BoJ’s Ueda signals concern over rising food prices but remains cautious on rate hikes.
• UK GDP data in focus; BoE’s hawkish stance could limit downside risks.

The GBP/JPY rose sharply during Wednesday’s session, posting gains of over 1.22% or 230 plus pips after a hot US inflation report sent the Greenback higher and pushed the Japanese Yen (JPY) lower against most G8 FX currencies. At the time of writing, the cross-pair trades at 191.99 as Thursday’s session began.

Pound gains over 230 pips as BoJ stance remains unclear

Inflation in the US hit 3% YoY, cleared that threshold for the first time in six months, and increased for the fifth consecutive month. Excluding volatile items, the so-called core CPI rose by 3.3% YoY, up from 3.1%.

In the meantime, Fed Chair Powell crossed the newswires and maintained its hawkish stance, commenting that the job on inflation is not completed and that monetary policy needs to be restrictive for now.

During the Asian session, Bank of Japan (BoJ) Governor Kazuo Ueda addressed the parliament and said that rising prices of fresh foods may not be temporary and may affect people’s sentiment. He emphasized that rate hikes have been appropriate and that further policy adjustments would depend on economic situations.

GBP/JPY traders are eyeing the UK's release of Gross Domestic Product (GDP) figures. Economists estimate Q4’s GDP will contract, even though the economy will grow annually. This, along with the Bank of England's (BoE) and BoJ’s hawkish stance, ‘dovish tilt, favors further downside on the cross-pair.

GBP/JPY Price Forecast: Technical outlook

The GBP/JPY has risen for the last three days and is poised to extend its gains past the 192.00 figure. However, the cross-pair remains tilted to the downside, with price action remaining below the 200-day Simple Moving Average (SMA) at 195.11 and under the Ichimoku Cloud (Kumo).

If buyers want to regain control, they must clear the 50-day SMA at 193.35 before testing the Senkou Span B at 193.96. Once surpassed, up next lies the 200-day SMA. On the flip side, if USD/JPY falls below the 191.00 mark, the next support would be the Senkou Span Aat 190.75. further losses below the Tenkan-sen at 190.09.