GBP/JPY eyes 163.00 as BoJ Kuroda continues to favor easy policy in its last meet
- GBP/JPY is aiming to recapture the 163.00 resistance as the Japanese Yen may remain volatile on the dovish BoJ policy.
- BoJ Governor Kuroda will be known for leaking sheer stimulus in the economy to get it out of deflation.
- Going forward, UK’s Manufacturing sector data will be of utmost importance.
The GBP/JPY pair is making efforts in recapturing the critical resistance of 163.00 in the Aisna session. The cross has been propelled after the Bank of Japan (BoJ) Governor Haruhiko Kuroda decided to hold its longstanding ultra-loose monetary policy to stimulate domestic demand. Also, any announcement on the band of 10-year Japanese Government Bonds (JGBs) remained absent.
BoJ Kuroda has mentioned that the Japanese economy is picking up as the impact of the pandemic and supply chain disruptions is fading away. However, remarks dictating moderate capital expenditure and consumption stated that the expansionary monetary policy will continue to stay for a longer period.
BoJ Governor Kuroda will be known for leaking sheer stimulus in the economy to get it out of deflation. However, a hefty price has been paid by commercial banks, which were not making any major profits.
On the inflation front, BoJ Kuroda cited that the core Consumer Price Index (CPI) that excludes oil and food prices is hovering around 4% and also inflation expectations are rising.
With the approval from both houses of Parliament Governor Nominee Kazuo Ueda Ueda has been confirmed as the next BoJ governor. While Shinichi Uchida and Ryozo Himino were appointed as the next BoJ deputy governors by Japan's upper house.
Meanwhile, the Pound Sterling is likely to dance to the tunes of the United Kingdom’s Manufacturing sector data. Monthly Manufacturing production (Jan) and Industrial Production are expected to contract by 0.1% and 0.2% respectively. Contracting manufacturing activities in the UK economy are accelerating the chances of a recession ahead.
BoE policymaker Swati Dhingra warned against further interest rate increases by citing “Overtightening poses a more material risk at this point.” She further added, “Many tightening effects are yet to fully take hold.”