GBP/JPY marches towards 165.00 as yen weakens broadly, UK PMI eyed

• GBP/JPY is advancing towards 165.00 amid broader weakness in the Japanese yen.
• The real income shocks for UK households may trim their confidence in the economy.
• The UK has no intention to return to the EU.
• Japan’s failure to raise the wage index is responsible for the BOJ’s ultra-loose monetary policy.

The GBP/JPY pair is heading towards the round-level resistance of 165.00 as the cross has extended its recovery after overstepping 164.40 in early Tokyo. The asset has remained in the grip of bulls from Friday after sensing a responsive buying action. The cross slipped to near 161.50 but later found a responsive buying action as investors found the asset a value bet. A sheer upside move recorded by the asset has shifted it into a positive trajectory.

Investors’ focus has shifted to the extent of the interest rates, the Bank of England (BOE) will dictate to barricade the soaring price pressures. The inflation rate in the UK economy has crossed the mark of 9% smoothly and the households are facing the headwinds of real income shocks. No doubt, the multiplier effects of the soaring inflation in the UK economy will trim the overall demand and henceforth the consumer confidence in the economy.

Meanwhile, the odds of the UK returning to the EU have trimmed significantly as Sir Kier Stammer, leader of the labor party in the UK has denied returning to the EU. Speaking to the BBC's political editor Chris Mason before the speech, Sir Keir said: "We want to go forward, not backward. And therefore this is not about rejoining the EU.

In today’s session, the focus will remain on the UK Purchase Managers Index (PMI) figures. A preliminary estimate for the Composite and Services PMI is 53.1 and 53.4 respectively, similar to their prior releases.

On the Tokyo front, the inability of the Japanese economy to spurt the overall demand is haunting the yen bulls. The Bank of Japan (BOJ) is worried over the lower inflation rate as the economy has failed to elevate the Wage Price Index (WPI) as required.