Ella 
GBP/JPY fell for the fourth consecutive day in Asia on Wednesday, trading around 199.50. The decline in GBP/JPY may be due to the strengthening of the Japanese yen (JPY), which may be the return of risk-averse flows in the market. The Bank of Japan (BoJ) may raise interest rates at its policy meeting next week, which will prompt shorts to exit and provide support for the yen.
On Tuesday, senior ruling party official Toshimitsu Motegi urged the Bank of Japan to communicate more clearly its plans to normalize monetary policy through gradual rate hikes, according to Reuters. In addition, Prime Minister Fumio Kishida added that the normalization of the Bank of Japan’s monetary policy will support Japan’s transition to a growth-driven economy.
In terms of economic data, the preliminary reading of the Nikkei Bank Manufacturing Purchasing Managers’ Index in July unexpectedly fell to 49.2 from 50.0 in the previous month, lower than the expected value of 50.5, indicating that factory activity fell for the first time since April. In contrast, the July services purchasing managers’ index surged to 53.9 from the final reading of 49.4 in the previous month. This was the sixth growth in the services sector this year and the fastest pace since April.
In the UK, the Bank of England (BOE) has reduced the probability of a rate cut in August, which could support the pound and ease the decline in the GBP/JPY cross. Traders are watching the results of the UK Purchasing Managers’ Index survey, which will be released during the London trading session on Wednesday.
The market generally expects the UK Services PMI to rebound in July, after falling to a seven-month low of 52.1 in June. The median forecast is 52.5. In addition, the manufacturing PMI is expected to rise to 51.1 from the previous value of 50.9.
