The pound rallied against the yen yesterday following reports of overwhelmingly positive Claimant count change data for January. Japan’s lower-than-anticipated fourth-quarter GDP data also fueled the yen’s sell-off. Overall, the GBP/JPY pair rallied from a low of 160.10 to a high of 161.40 in the past 24 hours.
According to the preliminary data published by Japan’s Cabinet Office, the country’s economy expanded 0.20% q-o-q in the December 2022 quarter after declining by 0.3% in the previous quarter but missing forecasts of a 0.50% growth.
Living costs rose by 0.50% q-o-q in 4Q 2022. Likewise, government spending grew by 0.30%. Exports increased by 1.40%, reflecting the fifth successive quarter of growth. Imports fell by 0.40%. In the meantime, business investment dropped by 0.10%.
On an annualized basis, Japan’s GDP grew by 0.60% in the December 2022 quarter, following a 1% contraction in the September 2022 quarter. Economists had forecast a growth rate of 2%.
Overall, the third-largest economy recorded a GDP growth of 1.10% in 2022, down from 2.10% in 2021.
In line with the market’s expectations, private consumption, which represents over 50% of the country’s GDP, increased by 0.50% in 4Q 2022. Capital expenditure declined by 0.50%, higher than market forecasts of a 0.20% drop.
Japan’s economy avoided recession but grew at a pace lower than forecast in 4Q 2022 as business investment plunged, an indication of the issues the central bank faces in winding down its huge stimulus program.
Japan’s Ministry of Economy, Trade, and Industry (METI) stated that the country’s industrial production (revised) rose by 0.30% m-o-m in December following a 0.20% increase in November. A flash estimate had pegged a 0.10% decline in industrial production. The economists did not anticipate any change in the flash estimate.
The reported figure indicates the second successive month of growth in industrial output. The increase was led by a 3.30% rise in transport equipment excluding motor vehicles. Also, the production machinery output grew by 0.80%. On a y-o-y basis, industrial production contracted 2.40% in December 2022, reflecting the second successive month of decline, following a 0.90% decrease in November.
In the UK, the Office for National Statistics stated that the Claimant count change, which reflects the change in the number of people claiming unemployment-related benefits, fell by 12,900 in January following a decrease of 3,200 in December. Economists had anticipated a rise in the number of jobless claims by 17,900.
The UK’s unemployment rate was 3.70% in December, unchanged from November and in line with economists’ estimates. In the three months that ended December 2022, the unemployment rate inched up 0.10%.
The country’s unemployment rate stood at 75.60% in the three months that ended December 2022, an increase of 0.20% from the earlier three-month period.
The number of employees on payroll rose by 102,000 in January from December figures to 30 million.
The economic inactivity rate fell by 0.30% q-o-q in the December 2022 quarter, to 21.40%.
Between November 2022 and January 2023, the number of vacancies declined by 76,000 to 1,134,000, reflecting the seventh successive quarterly decline since May-July 2022.
The historical price chart indicates that the GBP/JPY pair is rising after testing the support at 160.10. The next resistance is anticipated only near 165.45. Additionally, the currency pair is trading above its 50-day moving average, while the MACD indicator is showing a positive reading. Therefore, we anticipate the GBP/JPY pair to remain in an uptrend in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
