New Height After a Long Time
The GBP/JPY currency pair has risen to the highest point it has got since the 3rd of March, going up by 0.50% intraday to be in the close quarters of 154.40 as it headed towards the London open on Tuesday. While achieving so much, the Japanese pair has printed a three-day upward movement while there are firm US Treasury bond yields and a lot of caution in the optimism of the market in the lead-off to the publication of the United Kingdom’s monthly employment records.
GBP/JPY price chart. Source TradingView
The United States ten-year Treasury bond yield got up to the new high point since the month of June 2019 before the most recent pullback to 2.14%. The Treasury’s five-year coupon, on another hand, hit a new 34-months high point before it gets to step back to 2.098% at the very least.
As Bonds Reflect the Market
While the United States Treasury bond yield gives indications to the market’s unflinching belief that the Federal Reserve will push aggressively for a momentous monetary policy fastening, the equity futures in the United States and Europe equally printed average gains in concert with one another while there are wide expectations that peace will be achievable between Russia and Ukraine by May with the pace of mediations going on.
Restarting the diplomatic efforts aimed at getting a ceasefire agreement is another factor that contributed to the cautious optimism of the market. The peace meeting in Ankara had ended abruptly on Monday. While diplomatic resolutions are underway in Europe, increasing COVID cases in China are posing a new threat and creating new fears. Both situations are placing a heavy test on the GBP/JPY currency pair.
It should be consciously noted that the perspective of traders for a 25 basis points interest rate increase by the Bank of England is equally a factor that underpins the GBP/JPY currency pair’s sharp rise. With regards to the most recent reading of the Chicago Mercantile Exchange’s Bank of England Watch Tool, up to a hundred percent probability is in favor of the 25 basis points increment move.
For a measure of short-term directions, the United Kingdom’s Claimant Count Change for the month of February and International Labor Organization Unemployment figures for three months leading to January are all going to be very important.
Nevertheless, risk catalysts happen to gain significant attention the moment yen pairs are involved.