The British Pound advanced against the Japanese Yen on Thursday, with GBP/JPY rising 0.34% to 198.91 during the North American session. The move came after upbeat UK Services PMI data outweighed mixed economic figures from Japan, helping the cross recover from an intraday low of 198.12.
UK Services PMI Strengthens BoE Pause Expectations
The UK S&P Global Services PMI rose to 53.6 in August, beating both July’s figure and market expectations. The robust services performance highlighted resilience in the private sector, even as the Manufacturing PMI slipped to 47.3, indicating ongoing contraction.
Combined with earlier inflation data, the latest readings increased the likelihood that the Bank of England may pause its rate-cutting cycle at its September meeting.
Japanese PMIs Show Mixed Momentum
Japan’s economic picture was less uniform. The Services PMI cooled to 52.7 from 53.8, while Manufacturing PMI improved to 49.9 from 48.9, signaling slower but stabilizing conditions. S&P Global noted that overall private sector output in Japan expanded at the fastest pace in six months, suggesting some momentum remains intact.
Broader Market Sentiment
Risk appetite turned slightly cautious after strong U.S. PMI data suggested business activity is rebounding, reducing expectations for aggressive Federal Reserve rate cuts. Investors are now bracing for Fed Chair Jerome Powell’s remarks at Jackson Hole on Friday, alongside upcoming UK consumer confidence and Japanese inflation figures.
GBP/JPY Technical Outlook
The pair maintains a bullish bias, having rebounded from the 50-day SMA at 198.03 and climbing above the 20-day SMA at 198.35. Momentum indicators also favor buyers, with the RSI trending higher.
Upside targets: A break above 199.00 would bring 199.44 (August 20 high) into focus, followed by 199.50 and the psychological 200.00 level.
Downside risks: A daily close below 199.00 could trigger a pullback toward the 20-day SMA, with further support at 198.00.
Summary
GBP/JPY strengthened as upbeat UK Services PMI data boosted the Pound, reinforcing expectations of a Bank of England policy pause in September. Mixed Japanese PMIs had limited impact, while stronger U.S. data kept global investors cautious ahead of Powell’s Jackson Hole speech. Technically, the pair remains bullish above key SMAs, with a breakout above 199.00 potentially opening the way toward 200.00.
