GBPJPY drops below 168.00 as focus shifts to UK GDP data

• GBPJPY has surrendered the immediate support of 168.00 ahead of UK GDP numbers.
• Rising interest rates and inflation are expected to weigh on UK growth rates.
• The Japanese government is planning to release more stimulus and hike taxes for ultra-rich individuals.

The GBPJPY pair has failed to sustain above the immediate hurdle of 168.00 in the Tokyo session. The asset has witnessed selling pressure despite the headwinds of liquidity easing by the Japanese government to support the economic prospects.

The cross is expected to remain sideways as investors are shifting their focus toward the UK Gross Domestic Product (GDP) data, which will release on Friday. Meanwhile, the risk profile is positive as equities are continuously witnessing a liquidity injection from the market participants.

As per the market estimates, the UK economy will display a significant drop in the GDP numbers. On an annual basis, US GDP for the third quarter will drop to 2.1% vs. the prior release of 4.4%. And, on a quarterly basis, the GDP may contract by 0.5% against an expansion of 0.2%.

Accelerating interest rates by the Bank of England (BOE) has resulted in the postponement of the expansion plans by corporate. Also, firms are not operating at full capacity due to a sheer decline in retail demand led by rising inflationary pressures. Households are facing difficulties in fulfilling their recurring demand due to higher payouts for inflated goods. Apart from that, sky-rocketing energy prices have also impacted their pockets.

On the Tokyo front, the Japanese yen has strengthened despite the chatters of more stimulus by the administration. Japan’s Prime Minister Fumio Kishida is set to approve USD198 billion in the additional budget for the economic stimulus plan, as reported by Bloomberg. The government also “may opt to hike taxes on ultra-wealthy individuals with annual incomes of more than JPY1 billion ($6.8 million).”