The GBP/JPY cross experienced a boost as it attracted dip-buying near the 190.85-190.80 region following the release of upbeat UK Services PMI data. The flash UK Services PMI rose to 54.9 in April, exceeding the previous month’s final reading of 53.1. This positive data gave the British Pound (GBP) a good lift, leading to an increase in the value of the GBP/JPY pair.
The positive risk tone in the market played a significant role in undermining the safe-haven Japanese Yen (JPY). This shift in sentiment further supported the GBP/JPY cross, as traders moved away from safe-haven assets towards riskier investments. The cautious approach of the Bank of Japan (BoJ) towards policy tightening also contributed to the relative underperformance of the JPY.
Despite the gains made by the GBP/JPY pair, fears of intervention by Japanese authorities loom over the market. Traders are cautious about placing aggressive bets on the JPY ahead of the BoJ policy decision on Friday. The speculation of more aggressive policy easing by the Bank of England (BoE) adds another layer of uncertainty to the market, potentially capping the gains for the GBP/JPY cross.
As the GBP/JPY pair continues to trade around the 191.60 area, it will be essential to monitor the impact of upcoming economic data releases and central bank decisions on the movement of the currency pair. The fluctuation of the US Dollar (USD) and developments in geopolitical conflicts could also influence the direction of the GBP/JPY exchange rate. Traders should remain vigilant and stay informed about the latest market developments to make well-informed trading decisions.