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GBP/JPY tumbles below 165.50 as firmer UK food inflation dampens economic projections

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  • GBP/JPY has declined firmly below 165.50 as UK food inflation has soared.
  • A significant jump in UK inflation has cemented a bleak winter season ahead.
  • The speech from BOJ Kuroda will provide fresh cues on the interest rate and inflation guidance.

The GBP/JPY pair has dropped sharply below 165.50 firmly after failing to overstep the critical hurdle of 166.50 in early Tokyo. The Pound Sterling is facing immense heat and has tested Wednesday’s low at 165.50 as a significant surge in the United Kingdom's food inflation rate has dampened the sentiment of households.

The UK food inflation has surged to a 45-month high at 12.4% in November, higher than the prior release of 11.6% in October. A fresh impulsive move in the food category has weakened projections for the Christmas season ahead. Higher food prices are expected to leave households with lower earnings for disposable, which could hit their Christmas purchases.

As per the Financial Times, this is the biggest inflation rate in the food category since records began in 2005, and higher than overall shop price annual inflation, which was a record 7.4% in November, up from 6.6% in October.

While responding to the spiraling cost of food products, British Retail Consortium (BRC) chief executive Helen Dickinson said: “Winter looks increasingly bleak as pressures on prices continue unabated.”

Meanwhile, UK’s new freeport regime is hurting the European Union as the latter believes that the Freeport regime could attract fresh investments. The Freeport regime could provide the UK benefits of tax breaks and simplified customs controls ahead.

On the Tokyo front, investors are awaiting the speech from the Bank of Japan (BOJ) Governor Haruhiko Kuroda, which is due on Friday. The speech from Haruhiko Kuroda will provide fresh cues for monetary policy action ahead. Apart from that, inflation guidance will also be crucial as Tokyo's inflation surged dramatically in October.

GBP/JPY

Overview
Today last price 165.25
Today Daily Change -1.22
Today Daily Change % -0.73
Today daily open 166.47
Trends
Daily SMA20 166.6
Daily SMA50 165.4
Daily SMA100 164.33
Daily SMA200 162.78
Levels
Previous Daily High 167.43
Previous Daily Low 165.47
Previous Weekly High 169.04
Previous Weekly Low 166.11
Previous Monthly High 170.95
Previous Monthly Low 163.06
Daily Fibonacci 38.2% 166.68
Daily Fibonacci 61.8% 166.22
Daily Pivot Point S1 165.48
Daily Pivot Point S2 164.49
Daily Pivot Point S3 163.52
Daily Pivot Point R1 167.44
Daily Pivot Point R2 168.42
Daily Pivot Point R3 169.41

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