GBP/JPY Outlook: Russia-Ukraine Peace Talks to Activate Bulls Above 153
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- Investors’ risk appetite contributed to the increase in the GBP/JPY.
- By the end of 2022, the UK will gradually reduce its reliance on Russian oil.
- The UK region will release GDP, industrial production, and manufacturing production data on Friday.
The GBP/JPY outlook has significantly improved as the Russia-Ukraine peace talks continue to enhance the risk appetite that weighs on the Japanese yen.
On Wednesday, the GBP/JPY price continued to rise after trading between 151.00 and 152.24. At the beginning of the Asian session, the cross trades slowly but is likely to move higher once the market sentiment changes. Since President Zelensky accepted a diplomatic solution, investors’ risk appetite has improved greatly.
The Russian government had previously demanded that Ukraine’s NATO membership application be withdrawn. Before invading Ukraine, Vladimir Putin declared two pro-Russian regions “independent.” Zeleniskiy is willing to compromise, but he would also like the Kremlin to compromise. Risk-sensitive assets have been bolstered thanks to the inter-country ceasefire initiative.
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The ban on Russian oil imports caused the pound to lose momentum. By the end of 2022, Britain will reduce its dependence on Russian oil. However, changing suppliers in almost nine months hurt the British pound bulls, as the country imports a fair amount of oil and energy from Russia.
Japan’s gross domestic product (GDP) data released by their cabinet on Wednesday caused the Japanese yen to fall against the pound as well. Quarterly GDP in Japan grew by only 1.1%, well below the market estimate of 1.4% and the previous release of 1.3%. As a result, annual GDP data fell dramatically to 4.6% against the market consensus and previous 5.6% and 5.4% values, respectively.
GDP, industrial production, and manufacturing data are due out on Friday, focusing investors’ attention. In addition, total household spending data will be released by Tokyo on Thursday.
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GBP/JPY price technical outlook: Bull run in view
The GBP/JPY price is trying to take over the 153.00 level. However, the volume data does not support strong gains. Moreover, although the cross is above 20-period SMA, it still has to combat with 50-period SMA. Therefore, any sustained break above 153.25 will attract buyers towards the 154.00 area. On the flip side, the price may slip towards 152.50 ahead of 152.00.
