GBP/JPY is stabilizing on Friday after four consecutive daily losses, with the pair holding near the 198.00 mark following Thursday’s drop to its lowest level since August 7. The cross briefly tested 198.55 intraday before easing back, as mixed fundamentals continue to cap directional momentum.
Yen pressured by soft jobs data
The Japanese Yen extended its weakness in Asian trading after labor market data surprised on the downside. Japan’s unemployment rate rose to 2.6% in August from 2.3% in July, above the forecast of 2.4%. The uptick adds to signs of a cooling labor market, reinforcing pressure on the Yen ahead of this weekend’s LDP leadership election that will determine the next prime minister.
Pound weighed by slowing UK PMI
The British Pound struggled to take full advantage of the Yen’s softness as the latest UK PMI data highlighted a slowdown in business activity. The S&P Global Composite PMI fell sharply to 50.1 in September from 53.5 in August, while the Services PMI eased to 50.8 from 54.2, missing the consensus estimate of 51.9. The readings suggest the post-summer momentum in the UK economy has quickly faded, limiting Sterling’s upside.
Technical outlook: sellers still in control
From a technical standpoint, GBP/JPY is attempting to consolidate above the 198.00 handle after this week’s sharp correction. A sustained break below 198.00 would expose the recent low at 197.50, with further downside toward the August 7 trough at 196.24.
On the topside, resistance is aligned at 198.50 near the 21-period SMA. A move above this level would shift focus toward 199.00, where the 50-period SMA presents the next key test for buyers. Momentum indicators still favor a bearish bias: RSI remains below the neutral 50 zone despite recovering from oversold levels, while ADX near 30.5 signals that the downtrend retains moderate strength.
