The GBP/JPY cross experienced selling pressure in the Asian session, breaking a two-day gain streak and reaching a weekly high, while Japanese Yen demand increased, pushing it to a new daily low.

One of the main factors affecting the JPY is the sell-off in Japanese government bonds caused by the Bank of Japan’s negative interest rate policy. Following the hawkish remarks made by BoJ Governor Kazuo Ueda, the yield on the benchmark 10-year JGB rose to its highest level since January 2014.

Rumours of the Bank of England’s end of its rate-hike cycle and a 0.5% GDP drop in July in the UK add to the underperformance of the British Pound and pressure the GBP/JPY cross.

Japan’s core machinery orders fell 1.1% less than expected in July due to a slowdown in China and sluggish global development, indicating a challenging time ahead for the third-largest economy globally.

The path of least resistance for the GBP/JPY cross is probably downward, with a potential one-month bottom in the range of 182.70–182.65. The volatility injected by the ECB can offer traders transient opportunities.

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