GBP/JPY gains traction on risk-on mood, with traders eyeing BoJ Minutes, UK’s budget

• Wages in the United Kingdom edged lower, a release for the Bank of England, as it scrambled to bring down inflation.
• The Japanese economic docket will feature the Bank of Japan’s latest monetary policy minutes.
• GBP/JPY Price Analysis: To remain upward biased, above 162.00.

GBP/JPY consolidates around the 163.00 figure after seesawing within a 380 pip range on a risk-off impulse spurred by the United States (US) banking system crisis. However, investors’ worries have eased, as shown by Wall Street finishing with gains. At the time of writing, the GBP/JPY is exchanging hands at 163.30.

GBP/JPY likely to be underpinned by sentiment ahead of the UK’s budget

Investors sentiment remains upbeat. An employment report in the United Kingdom (UK) revealed by the Office for National Statistics (ONS) showed that the labor market is easing. The UK economy added 65K people to the workforce, above the 52K expected by analysts, but trailed the prior’s month data of 74K. Delving into the data, the Unemployment Rate remained unchanged at 3.7% but missed forecasts of 3.8%, while wages fell from 6% to 5.7%,  easing the Bank of England (BoE) pressure.

After the collapse of Silicon Valley Bank (SVB), global investors slashed bets that most central banks would continue their tightening cycle. Though inflation remains an issue for most central banks, and the BoE is expected to raise rates by 25 bps at the upcoming monetary policy meeting.

On the Japan front, the lack of economic data in the docket left traders focused on the release of the Bank of Japan (BoJ) monetary policy minutes over the January meeting. On the UK side, the UK Chancellor of the Exchequer, Jeremy Hunt, is expected to reveal its spring budget.

According to Reuters, “British Finance Minister (Chancellor) Jeremy Hunt will announce on Wednesday how he will try to speed up the world’s sixth-biggest economy after the shocks of Brexit, a heavy COVID-19 hit and double-digit inflation have left it lagging behind its peers.”

GBP/JPY Technical analysis

The GBP/JPY trades sideways, influenced by the 20, 50, 100, and 200-day EMAs’ confluence around the 161.89-162.40 mark. Nevertheless, if the exchange rate stays above the latter, the GBP/JPY pair would remain upward biased. A bullish continuation is expected and will face solid resistance at 164.07, March’s 14 daily high, followed by the 165.00 figure, and the February 28 high at 166.00. On an alternate scenario, the GBP/JPY first support would be the 20-day EMA at 162.40, followed by the 100-day EMA at 162.24, ahead of testing the 200-day EMA at 161.97.