British Pound moves little after UK GDP as intervention risks support Yen
The GBP/JPY cross reverses a modest intraday dip, climbing back to the 212.00 mark during the early European session on Thursday, though it remains confined within a range held over the past week or so.
The British Pound remained largely unchanged in response to the UK's GDP data, following intervention risks that favor the Japanese Yen. The Office for National Statistics reported that the UK economy expanded by 0.7% in the July to September quarter, with the annual rate reaching 1.9%. This marked a significant increase from 1.4% year-on-year in the prior quarter.
However, the GBP struggled amid a robust US Dollar, which continued to weaken the Yen, even as Japan's inflation rate accelerated. Despite the BoJ's policy rate of 1.25% compared to the BoE's 4.00%, the interest rate differential of 275 basis points maintains the GBP's yield advantage. Japan's top currency envoy, Atsushi Mimura, cautioned against excessive currency volatility, adding to intervention risks and hindering bearish sentiment around the Yen.
The GDP, a key indicator of UK economic activity, is released monthly and quarterly, with a quarterly rise typically supporting the Pound Sterlign. The situation is expected to remain cautiously optimistic for the GBP, though follow-through buying may be required for sustained gains.
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