GBPJPY holds steady around 166.00 ahead of UK Autumn Statement, downside seems cushioned

• GBPJPY is seen oscillating in a narrow trading band around the 166.00 mark.
• Expectations for further rate hikes by the BoE continue to lend some support.
• Bulls now await the UK government's financial plan before placing fresh bets.

The GBPJPY cross struggles to gain any meaningful traction and seesaws between tepid gains/minor losses through the early European session on Thursday. The cross is currently placed near the top end of its weekly range, just above the 166.00 mark, awaiting the UK government's financial plan before the next leg of a directional move.

Chancellor Jeremy Hunt will unveil his Autumn Statement later today and is expected to reduce the size of the fiscal gap. This will play a key role in influencing the sentiment surrounding the British Pound and help determine the near-term trajectory for the GBPJPY cross. In the meantime, growing acceptance that the Bank of England will continue raising borrowing costs to combat stubbornly high inflation acts as a tailwind for the Sterling.

The bets were reaffirmed by Wednesday’s release of hotter-than-expected UK consumer inflation figures, which showed that the headline CPI accelerated to a 41-year high of 11.1% in October. Furthermore, BoE Governor Andrew Bailey said on Wednesday that Britain's very tight labour market was a key reason why further interest rate increases were likely. This, along with a softer Japanese Yen, continues to lend some support to the GBPJPY cross.

The initial market reaction to the latest geopolitical development fades rather quickly after early findings point to the missile that hit Poland on Tuesday being accidentally fired by Ukrainian forces. Apart from this, a more dovish stance adopted by the Bank of Japan is seen undermining the safe-haven JPY. In fact, Governor Haruhiko Kuroda said on Thursday that it is important to continue monetary easing to support the economy.

The fundamental backdrop supports prospects for a further near-term appreciating move for the GBPJPY cross, though bulls prefer to wait on the sidelines ahead of the key event risk. This makes it prudent to wait for some follow-through buying before positioning for additional intraday gains. That said, any meaningful downtick could attract some buyers near the 100-day SMA support, which should now act as a key pivotal point.

Technical levels to watch