GBP/JPY rebounds modestly after plummeting to near 164.50 ahead of Japanese job data

• GBP/JPY is likely to extend losses if the cross drops below 164.50 confidently.
• BOJ’s Amamiya has emphasized continuing policy easing to spurt the growth rate.
• Japan’s employment data is expected to remain upbeat as jobless data may slip to 2.5%.

The GBP/JPY pair has surrendered more than 1% gains after printing a fresh weekly high at 166.33 on late Wednesday. The availability of significant offers while testing the previous week’s high indicates that the pound bulls need more momentum to establish at elevated levels. A sheer downside move has triggered the yen bulls and the asset has been dragged into a negative trajectory.

The cross has delivered a modest rebound after plummeting to near 164.50, however, the downside remains warranted as investors will capitalize on the weak pullback to initiate fresh shorts.

It seems like the commentary from Bank of Japan (BOJ) Deputy Governor Masayoshi Amamiya has strengthened the Japanese yen despite favoring the continuation of an ultra-loose monetary policy.  BOJ Amamiya has highlighted the fact that the inflation rate above 2% is temporary and the BOJ is aiming to keep price pressures above 2% comfortably. Adding to that, an easy monetary policy will accelerate the wage rate hike, which is necessary to keep the inflation rate above desired levels.

This week, the employment data from the Statistics Bureau of Japan will be of utmost importance. The jobless rate may trim to 2.5% vs. the prior release of 2.6%. Also, the Jobs/Applicants ratio is expected to increase to 1.25 from the former figure of 1.24.

On the UK front, an increase in the overall inflation rate is impacting the paychecks of the households. The annual inflation rate has climbed to 9.4% and to contain the price pressures the Bank of England (BOE) will announce one more bumper rate hike ahead.