GBP/JPY falls below 160.00 as market sentiment deteriorates

The GBP/JPY pair is exhibiting erratic behavior throughout the Asian session. The cross has traded in a narrow range between 163.08 and 163.37, but a risk-averse market sentiment favors the downside. The revelation of a higher inflation rate by the United States and the increase in interest rates by the Bank of Canada (BOC) by 100 basis points (bps) have not only rendered their respective currencies volatile. The findings have also increased worldwide economic slump concerns.

As the inflation rate has already skyrocketed and economic prospects are dismal, the Bank of England (BOE) does not have a great deal of discretion to impose policy tightening. The continued political turmoil in England following Boris Johnson's departure as prime minister of the United Kingdom threatens their economic potential. In addition, the persistent Northern Ireland Protocol (NIP) difficulties with the Eurozone are plaguing the pound bulls.

In addition, positive UK economic data has failed to bolster the pound. The Gross Domestic Product (GDP) increased to 0.5% from -0.3% previously reported on a monthly basis. The manufacturing production increased by 2.3%, significantly more than the previous release of 1.3%.

Investors are expecting the release of Japan Industrial Production statistics on the Tokyo front. Annually and monthly, the economic data is viewed as stable at -2.8 percent and -7.2 percent, respectively. The Bank of Japan's (BOJ) interest rate announcement next week will be of the highest importance. The chances favor dovish comments from Governor Haruhiko Kuroda of the Bank of Japan.