GBPJPY attempts a rebound from 166.00 ahead of UK GDP data

• GBPJPY has witnessed a loss in the downside momentum of around 166.00 as the focus has shifted to UK GDP.
• The UK GDP data is seen lower at 2.1% vs. the prior release of 4.4% amid accelerating BOE rates.
• There is no third budget plan on the table for now by the Japanese administration.

The GBPJPY pair has sensed buying interest after a sheer decline to near 166.00 in the late New York session. The asset has displayed signs of exhaustion in the downside momentum, however, it would be early to call it a reversal amid the unavailability of any reversal trigger.

Meanwhile, the risk tone is extremely negative as S&P500 nosedived on Wednesday led by multiple headwinds. Lay-off by Meta to trim discretionary spending, anxiety ahead of the US Consumer Price Index (CPI) numbers, and firmer chances of Republicans’ win in US mid-term elections weighed significant pressure on the US equities.

For further guidance, investors are focusing on the UK Gross Domestic Product (GDP) data, which will release on Friday. The GDP data on an annual basis is seen lower at 2.1% vs. the prior release of 4.4%. And, the quarterly regime is expected to display negative growth by 0.5% against an expansion of 0.2%.

Accelerating interest rates by the Bank of England (BOE) to curtail the double-digit inflationary pressures have resulted in the postponement of the expansion plans by various firms to avoid hefty interest obligations. Therefore, the extent of the economic activities has declined sharply. The scale of economic activities may decline further as UK novel leadership is preparing a budget on spending cuts and tax hikes to contain the debt crisis.

On the Tokyo front, Japanese Economy Minister Shigeyuki Goto said on Wednesday, it is “desirable for FX to move stably reflecting fundamentals.” The Japanese official also clarified that there is no plan on the table for the third budget. This week the administration confirmed a second budget worth 29.1 trillion Japanese Yen after a budget of $198 Billion to spurt the aggregate demand.