GBP/JPY hesistates, but looking bearish on China tariff threats

• GBP loses steam as trade wars surge back into markets, stoking fears.
• The Yen continues to gain on broad market fears, and a lack of data for Friday leaves markets exposed to sentiment swings.

The Sterling is on shaky ground against the Yen, trading around 148.00 in the early Asia session.

It's been a hectic week for the GBP/JPY, with UK macro figures,  the US Fed's rate hike, and ongoing trade war fears dominating market perspectives. Ultimately it's the trade wars that are driving the markets heading into Friday's data-light session, and the matter is escalating with China preparing to unleash retaliatory tariffs against the US following Trump's $50B shot aimed at Beijing.

China responds

China is demonstrating it's not afraid to back up its rhetoric with action, and is giving the US one last chance to reach agreeable terms with them before unleashing a round of retaliatory tariffs. The ever-growing threat of a trade war between two of the world's largest economies is taking the top off of risk appetite in the markets, and the Yen is geared to make further gains after knocking the Sterling off of a descent upward push in Thursday's trading.

Adding to the Yen-positive thread in the markets today was mildly-positive inflation figures for Japan, with the National Consumer Price Index coming in at 1.5% earlier, lower than the anticipated 1.7% but still an improvement over the previous 1.4%.

GBP/JPY Levels to watch

The pair staggered lower after several days of gains, and support is currently priced in nearby at Thursday's low of 147.65, while resistance is sitting at Wednesday`s swing low of 148.95 and Thursday`s high of 150.18.