GBP/JPY skids below 165.00 as BOJ warns intervention, UK Retail Sales eyed

• GBP/JPY has surrendered the critical support of 165.00 on potential BOJ intervention odds.
• Liz Truss’s stimulus packages will bring a rebound in the headline inflation rate.
• A vulnerable performance is expected from UK Retail Sales data.

The GBP/JPY pair has slipped below the critical support of 165.00 in the Asian session. The asset is declining strongly after surrendering the cushion of 166.00 on Wednesday. The cross has marked its auctioning territory in a 164.80-165.87 range and odds are favoring a downside break, which will drag it towards 164.00.

The pound bulls have failed to capitalize on the lower reading of the headline UK inflation data. The annual Consumer Price Index (CPI) landed at 9.9%, lower than the estimates of 10.2% and the prior release of 10.1%. Well, the inflation rate of 9.9% is still huge but back of the mind, it will delight with the fact that the economy is out of double-digit inflation rate despite soaring energy bills. However, the core CPI remained in line with the estimates at 6.3%.

It would be early to call it exhaustion in the price pressures as lower reading is not here to stay for longer. The announcement of stimulus packages by next UK Prime Minister Liz Truss to safeguard households from skyrocketing energy bills and to scale down the extent of tax brackets will keep the inflationary pressures on the elevated side.

On Friday, the UK Retail Sales data will hog the limelight. The economic data is expected to display a decline of 4.2% against a decline of 3.4% reported earlier on an annual basis. Also, the monthly figure will display a decline of 0.5% against a rise of 0.3% reported earlier.

Meanwhile, the yen bulls have been infused with fresh blood as the Bank of Japan (BOJ) has warned of intervention in the Fx moves to support the domestic currency. Nikkei reported o Thursday that the BOJ conducted a foreign exchange "check" to see what market participants view the JPY's valuation. According to the news outlet, this is a sign that the BOJ could be making preparations for an intervention in the market.