22 Nov 2024

• GBP/JPY may depreciate as UK Retail Sales fell 0.7% MoM in October, exceeding the expected 0.3% decline.
• Reuters survey indicated that 56% of economists anticipate a BoJ rate hike in December.
• Governor Kazuo Ueda mentioned the possibility of further rate hikes, highlighting the Yen's impact on economic and price stability.
• GBP/JPY is holding steady around 194.50 during the early hours of the European session, following the release of UK Retail Sales data for October, which came in lower than anticipated. Market participants are now turning their attention to the forthcoming S&P Global UK Purchasing Managers’ Index (PMI) figures expected later today.
  
  In October, UK Retail Sales experienced a month-over-month decline of 0.7%, which was significantly worse than the forecasted decrease of 0.3% and reversed the previous month's increase of 0.1%. On a year-over-year basis, Retail Sales rose by 2.4%, falling short of the expected 3.4% increase and the prior figure of 3.2%.
  
  During the Asian trading session, the GBP/JPY pair encountered difficulties as the Japanese Yen (JPY) strengthened, influenced by a Reuters survey indicating economists' expectations regarding the Bank of Japan (BoJ). The survey revealed that 56% of economists predict a potential interest rate hike by the BoJ in December, attributed to the depreciation of the JPY and improving economic conditions.
  
  Furthermore, Governor Kazuo Ueda emphasized the importance of addressing the Yen's influence on economic and price stability, hinting at the possibility of additional rate increases. Additionally, Prime Minister Shigeru Ishiba’s administration is contemplating a $90 billion stimulus package aimed at easing the financial strain on households due to rising prices.
  
  Recent statistics showed that Japan’s National Consumer Price Index (CPI) moderated to a nine-month low of 2.3% year-over-year in October. The annual core CPI, which excludes fresh food, also decreased to 2.3%, marking a six-month low, slightly above the anticipated 2.2%.
  
  Moreover, the Jibun Bank Japan Services Purchasing Managers’ Index (PMI) rose to 50.2 in November, an increase from October's 49.7, which had been the lowest level in four months. Conversely, the Manufacturing PMI unexpectedly declined to 49.0 in November, the lowest since March, down from 49.2 in October, and falling short of market expectations of 49.5.