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      Sluggish UK Recovery but Delayed BoE Easing Expectations Underpin Sterling

      Eva Chen

      Central Bank

      Forex

      Summary:

      GBPJPY attracted follow-through buying for a third straight day. Bulls consolidated gains after testing the 200.06 psychological handle during Friday’s European morning.

      Buy

      GBPJPY

      EXP
      PENDING

      199.600

      Entry Price

      204.140

      TP

      197.800

      SL

      199.947 -0.239 -0.12%

      --

      Point

      PENDING

      197.800

      SL

      CLOSING

      199.600

      Entry Price

      204.140

      TP

      Fundamentals

      GBPJPY attracted follow-through buying for a third straight day. Bulls consolidated gains after testing the 200.06 psychological handle during Friday’s European morning.
      Friday’s data showed UK output stagnated in July after a 0.4% MoM rise in June.Relative to recent norms the UK economy performed resiliently in H1-25—Q1 +0.7 % QoQ, Q2 +0.3%—boosted by front-loaded government spending and exporters advancing shipments ahead of US tariff implementation. Consensus expects momentum to fade in H2 as tariffs weigh on global demand and the domestic labour market softens.
      The BoE’s August projection of 1.25% GDP growth for 2025 is well below the 2010-2019 average of 2 %. Firms report freezing hiring and capex pending clarity on stricter employment legislation and the risk of becoming the next tax target.
      The ONS additionally revealed an unexpected July contraction in manufacturing and industrial output and a widening of the 3-month trade deficit to £10.3 bn.
      Meanwhile, uncertainty over the timing and cadence of BoJ rate cuts continues to depress JPY, while risk-on sentiment erodes the currency’s safe-haven appeal, providing a cross-specific tailwind for GBPJPY.
      Reduced probability of an immediate BoE easing cycle coupled with broad USD softness is sterling-supportive and thus GBPJPY-positive.
      Sluggish UK Recovery but Delayed BoE Easing Expectations Underpin Sterling_1

      Technical Analysis

      GBPJPY remains range-bound but with a constructive bias on Friday. While the 197.93 support holds, scope exists for a move higher. The pair has broken out of the mid-August consolidation during European dealing. A sustained break above 200.57 would re-instate the up-move from 184.35 and overcome the 100% projection of the 180.00-199.79 leg (184.35-204.14).
      Conversely, a daily close beneath 197.93 would shift the bias back to the downside, exposing the 195.01 support zone.

      Trading Recommendations

      Trading Direction: Buy
      Entry Price: 199.60
      Target Price: 204.14
      Stop Loss: 197.80
      Valid Until: September 27, 2025, 23:55:00
      Support: 199.59/198.81/198.33
      Resistance: 200.57/200.74/201.60
      Risk Warnings and Investment Disclaimers
      You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.

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