GBP/JPY rises toward 162.00 from two-week lows, Truss to become UK PM

• Liz Truss wins Conservative Party leadership battle.
• UK data: S&P Global Service PMI for August revised lower.
• Yen remains under pressure, despite risk aversion.

The GBP/JPY cross turned positive for the day and erased losses, after recovering from the lowest level in almost three weeks. It bottomed at the beginning of the week at 160.63 and recently hit a fresh daily high at 161.91.

The recovery of the cross took place as GBP/USD moved off multi-year lows and as USD/JPP climbed back to the 140.50 area. The yen remains weak even as European stocks drop sharply.

The pound was unaffected following the result of the Tory race that offered no surprises. Liz Truss will become the next prime minister. “I will deliver a bold plan to cut taxes and grow our economy”, said Truss in brief acceptance speech. Regarding the energy crisis she said she will deal “with people’s energy bills but also dealing with the long-term issues we have on energy supply.”

Truss will become PM on Tuesday. On Wednesday, Bank of England’s official will testify to a Treasury Committee at the Parliament. Over the next days, market participants will keep an eye on Truss’s comments on BoE’s mandate.

On economic data, the UK S&P Global Service PMI came in at 50.9 in August, below the 52.5 of the flash estimate.

Technically, GBP/JPY is moving sideways around 161.50 since mid-August. A close below 161.00 should point to more losses while on the upside, a break above 162.50 would increase the odds of a more sustainable recovery targeting 164.00 initially.

Technical levels