GBP/JPY crosses 163.00 as Truss wins UK PM elections, BOE Bailey’s speech eyed
- GBP/JPY has overstepped the crucial hurdle of 163.00 vigorously on novel UK leadership.
- Next UK PM Liz Truss announced a relief fund of 130 billion pounds to tame soaring energy bills.
- A downbeat Japan’s Overall Household Spending data has weakened the yen bulls.
The GBP/JPY pair has displayed a juggernaut rally in the Asian session and a similar performance is expected in the European session ahead. A perpendicular upside move has driven the pound bulls above the critical hurdle of 163.00. At the press time, the GBP/JPY cross is trading around 163.08, 0.73% above from its previous close. With a revival in the UK’s political instability after Liz Truss wins leadership of the Conservative party, pound bulls have got an adrenaline rush.
Broadly, the sterling has remained vulnerable after the resignation of ex-UK PM Boris Johnson. This brought political instability to the UK economy as the Cabinet Office was demolished. However, Liz Truss's win for the next UK PM has underpinned the pound bulls against the Japanese yen.
The UK economy is going through severe pain of higher energy prices, which have soared energy bills for households, inflation rate, and have deepened the energy crisis. To safeguard households from soaring energy bills, going to be UK PM has announced a fund of 130 billion pounds for freezing bills. The new cabinet will set a fixed unit price for energy suppliers to sell gas & electricity to households.
Going forward, the speech from Bank of England (BOE) Governor Andrew Bailey on Wednesday will be of utmost importance. BOE’s Bailey is expected to dictate the likely monetary policy action for September 15.
On the Tokyo front, vulnerable Overall Household Spending data has weakened the yen bulls. The economic data has landed at 3.4%, lower than the expectations of 4.2% and the prior release of 3.5%. This indicates households’ pessimism in the Japanese economy and also lower expenditure by the former may restrict the inflation rate.