The GBP/JPY pair is stabilizing near the 198.00 level on Friday after bouncing back from Thursday’s two-month low of 197.50, effectively ending a four-day losing streak.
Yen Weakens on Soft Labor Data
The Japanese Yen came under renewed pressure following weaker-than-expected labor market data. Japan’s unemployment rate rose to 2.6% in August, exceeding both the forecast of 2.4% and July’s figure of 2.3%. The disappointing data dampened demand for the Yen during the Asian session.
Pound Struggles Amid Weak UK PMI
Despite the Yen’s weakness, the British Pound failed to gain significant ground as UK economic indicators showed signs of deceleration. The S&P Global Composite PMI dropped to 50.1 in September—its lowest in five months—down from 53.5 in August. Meanwhile, the Services PMI fell to 50.8, well below expectations of 51.9 and sharply lower than August’s 16-month high of 54.2, indicating softer momentum in the UK’s dominant services sector.
Technical Outlook: GBP/JPY
From a technical standpoint, GBP/JPY is attempting to hold above the key 198.00 level. A clear break below this mark could bring the focus back to 197.50, with potential downside extending toward the 196.24 low from August 7.
On the upside, 198.50 is the initial resistance, aligning with the 21-period Simple Moving Average (SMA) at 198.38. A move above this could open the path toward the 199.00 level, where the 50-period SMA poses the next hurdle for bullish momentum.
Momentum Indicators:
- RSI: Recovering from oversold levels but still below the neutral 50 mark; limited upside unless it breaks above 55.
- ADX: Around 30.5, indicating the recent downtrend still holds moderate strength despite the current consolidation.
Summary
While GBP/JPY is showing signs of stabilization near 198.00, weaker UK PMI data is capping Sterling’s upside. Meanwhile, the Yen remains under pressure due to disappointing labor data, but broader risk sentiment and upcoming central bank moves will likely determine the next directional shift.