GBPJPY rebounds from 166.00, investors seek clarity over UK’s fiscal tightening plans

• GBPJPY is gradually marching towards 167.00 amid a risk appetite theme.
• Investors seek more development on UK’s fiscal tightening measures for making informed decisions.
• Tokyo’s Household Spending data is seen lower at 2.7% vs. the prior release of 5.1%.

The GBPJPY pair has picked strength around 166.00 after a mild gap-down open in most risk-sensitive currencies. The cross has sensed buying interest as the overall sentiment in the market is extremely bullish amid accelerating chatters over a slowdown in the Federal Reserve (Fed)’s pace of pushing interest rates higher.

The asset is marching towards the round-level hurdle of 167.00 ahead and further price action will be guided by developments over fiscal tightening by the UK administration to trim the debt crisis. As debt levels have already piled up in the UK economy, the duo of UK Prime Minister Rishi Sunak and Chancellor Jeremy Hunt is drafting ways to contain the debt crisis impact.

A report from Guardian on Sunday dictated that UK FM is setting out plans of up to 60 billion Pounds ($67.82 billion) of tax rises and spending cuts, including at least 35 billion pounds ($39.56 billion) in cuts for Nov. 17. In times, when the UK economy is going through rough times of weaker economic prospects, and negative Gross Domestic Product (GDP) projections, liquidity reduction from the economy would make UK officials’ job more tedious.

On the Tokyo front, investors are awaiting overall Household spending data, which is a key indicator that determines retail demand. For September’s month, the economic catalyst is expected to display a steep fall to 2.7% vs. the prior release of 5.1%. This may bring volatility in the Japanese yen as lower spending by households indicates a decline in retail demand. Also, it would impact inflationary levels.