GBPJPY rebounds from 165.00 despite gloomy projections due to the UK recession

• GBPJPY has sensed fresh demand around 165.10 on expectations of BOJ’s repeat intervention plans.
• UK’s recession situation will be two years longer than observed in the period of the global financial crisis.
• A firmer rebound in USDJPY may result in a repeat of BOJ’s intervention in the currency market.

The GBPJPY pair has picked significant bids after testing Thursday’s low around 165.10 in the early Tokyo session. The cross has been supported despite the headwinds of risk-off impulse and deepening UK recession. The risk-off mood is extending its period as S&P500 futures have continued their downside momentum in the Tokyo session.

The asset has sensed fresh demand around 165.10 despite the bleak growth outlook in the UK economy due to a recession situation. In the monetary policy announcement by the Bank of England (BOE) on Thursday, BOE Governor confirmed that the UK economy is in recession and the situation will last potentially two years more than observed in the period of the subprime crisis.

BOE Governor hiked the interest rates by 75 basis points (bps) for the first time since 1989 as the inflationary pressures have settled above double-digit figures and are harming the economic prospects. Weaker economic prospects have left less room for more rate hikes as an attempt of the same would result in severe jobless numbers and claims that may dampen the economic situation.

On the Tokyo front, investors are worried about Japan-North Korea renewed tensions after North Korea fired an unidentified ballistic missile over Japan, as broadcasted by NHK. For safety measures, Japan administration warned residents to take shelter from missile threats. Apart from that, a firmer rebound in the USDJPY pair has triggered expectations for repeat intervention by the Bank of Japan (BOJ) to support the Japanese yen against sheer volatility.