Global Markets Shift: UK Job Stagnation, Japan’s Policy, and GBPJPY Reversal

In 2024, economic uncertainty defines both the UK and Japan. The UK job market has tightened, with competition for roles at a three-year high as employers hold off on hiring and layoffs, awaiting key policy decisions from the new Labour government. Political uncertainties, including potential tax hikes and reforms, have slowed labor market activity, increasing jobseeker competition.
In Japan, the Bank of Japan maintains its ultra-easy monetary policy, emphasizing patience in adjusting rates until inflation targets are firmly met. Collaboration between the central bank and government aims to support economic stability, with no immediate plans for rate hikes.
These economic trends also impact currency markets, particularly the GBPJPY pair, where technical indicators suggest a potential bullish reversal following a prolonged downtrend.

The UK labor market in 2024 is characterized by stagnation, with employers largely refraining from both hiring and layoffs as they anticipate key policy announcements from the newly elected Labour government. Political uncertainty—driven by potential tax increases, fiscal tightening in the forthcoming October budget, and proposed reforms to strengthen worker rights—has led to a cautious stance across businesses. This subdued labor market churn is contributing to persistent labor shortages, which risk intensifying inflationary pressures and constraining economic growth.
Firms are engaging in labor hoarding, concerned that future hiring could prove challenging, while job vacancies have stabilized below pre-pandemic levels. This dynamic is particularly concerning for the Bank of England, as it may complicate efforts to achieve inflation targets, potentially influencing the trajectory of future interest rate adjustments. Concurrently, jobseekers face heightened competition due to limited opportunities, further intensifying the economic headwinds.

In August 2024, the UK job market hit its tightest point in three years, with 2.09 jobseekers per vacancy—the highest since May 2021. Job vacancies dropped 17.46% from the previous year, totaling 857,765, while unemployment and benefit claimants rose due to redundancies and long-term illness. Despite increased competition, salaries grew by 3.17% year-on-year, though over half of job postings lacked salary transparency.
Companies remained cautious, leaving vacancies open longer, particularly in travel, sales, and accounting sectors, while graduate, domestic help, and hospitality saw growth. The market’s stagnation indicates businesses are waiting for economic improvements before expanding hiring, potentially influencing future interest rate cuts.

Bank of Japan Governor Ueda Kazuo met with Japan’s new Prime Minister Ishiba Shigeru, discussing the country’s financial and economic outlook. Ueda emphasized that the central bank is maintaining its ultra-easy monetary policy to support the economy and will adjust its stance if economic conditions evolve as expected. Both agreed to continue close cooperation between the government and the central bank, with no specific proposals from Ishiba on monetary policy. The prime minister stated that while the government cannot dictate central bank actions, he personally believes Japan is not currently ready for another rate hike.

Asahi Noguchi, a dovish member of the Bank of Japan’s policy board, emphasized the need to maintain accommodative financial conditions until inflationary expectations firmly align with the 2% target. Noguchi’s comments come after Prime Minister Shigeru Ishiba urged caution on further rate hikes, reinforcing the view that the BOJ will hold off on tightening monetary policy too soon. Despite two rate hikes this year, Noguchi signaled patience in adjusting the current policy, stressing the importance of a gradual approach to ensure the economic environment is conducive to inflation stability. Economists widely expect no changes in the BOJ’s stance until at least January 2025.

Since rebounding from the 208.098 peak on July 11, the GBPJPY pair has been in a clear downtrend. Despite strong downward momentum, the pair found support at 180.079 and has since entered a sideways consolidation. A bullish reversal pattern, known as a failure swing, has emerged. The key swing low at 183.703 failed to break below the previous trough, and prices subsequently broke above 193.458. However, the breakout lacks decisiveness, leaving uncertainty about whether the pair will follow a sustained upward trajectory.
Support for the upward movement comes from the 20 and 50-period Exponential Moving Averages (EMA), with prices currently trading above both lines. Additionally, the Relative Strength Index (RSI) is holding above the 50 baseline, indicating potential bullish momentum. However, the Momentum oscillator remains below the 100 level, and the 20-period EMA has yet to cross above the 50-period EMA, suggesting caution is warranted.
Using Fibonacci retracement on the swing high of 193.458 and the swing low of 183.073, potential upside price targets can be projected at 199.479, 209.222, and 224.986.

In 2024, the UK job market faces stagnation as political uncertainty and cautious business activity slow hiring, leading to increased competition among job seekers. Meanwhile, the Bank of Japan maintains an ultra-easy monetary policy, delaying rate hikes to support economic stability. In currency markets, the GBPJPY pair shows signs of a potential bullish reversal, though caution remains as technical indicators suggest mixed momentum.