GBP/JPY: Bulls struggle to defend 154.00, UK PMI in focus

• GBP/JPY steps back from weekly top amid a choppy session.
• BOJ minutes conveyed policymakers’ indecision, Powell’s rejection to rate hikes favor market mood.
• UK stays optimistic over removing virus-led restrictions on July 19, Brexit woes continue.
• Japan’s Leading Economic Index for April, UK’s preliminary PMIs for June will be crucial for fresh impulse.

GBP/JPY eases to 154.35 during the latest pullback from the week’s top amid Wednesday’s Asian session. The cross-currency pair initially cheered risk-on mood to extend the previous day’s upside momentum before the sustained weakness of the US Treasury yields probed buyers of late. Also testing the pair’s run-up could be the cautious mood ahead of the key UK data.

Comments from most US Federal Reserve (Fed) officials, including Chairman Jerome Powell, ruled out any immediate challenges to the central bank’s easy-money policies. This U-turn from the last week’s hawkish rhetoric favored market sentiment and propelled the GBP/JPY during the three-day uptrend earlier in Asia. Additionally, the UK’s optimism towards July 19 deadline for unlocking also favors the pair buyers.

However, BOJ minutes suggesting uncertainty over the economic outlook and challenges to inflation pick-up tested the quote’s upside afterward. Additionally, the UK’s Brexit struggles after five years of battle, the recent ones over the EU citizen’s application to remain in Britain, also weigh n the GBP/JPY prices.

It’s worth noting that a lack of major data/events restricts the market moves ahead of the key UK PMI for June, as well as April’s Leading Economic Index for Japan.

Amid these plays, S&P 500 Futures print mild gains whereas the US 10-year Treasury yields remain pressured.

Given the anticipated weakness in the scheduled data, Britain’s upbeat outlook over removing the virus-led activity restricts may help the GBP/JPY prices in the short term. However, major attention will be given to tomorrow’s BOE.

Technical analysis

Unless declining below April top near 153.40, GBP/JPY stays directed towards 21-day Simple Moving Average (SMA) and a monthly resistance line, respectively around 154.80 and 155.20.