GBP/JPY consolidating below 149.50

• Earlier in the European session, the UK Manufacturing Purchasing Managers Index (PMI) for April fell to a 17-month low at 53.9. 
• Investors will pay attention to the Markit Services PMI on Thursday but odds of a rate hike in May seem far-fetched.

The GBP/JPY is trading at around 149.44 down 0.69% on Tuesday.

The GBP is under heavy pressure as the prospects of a rate hike in May are getting very slim according to the latest polls. Earlier in the day, the UK Manufacturing Purchasing Managers Index (PMI) for April fell to 53.9 a 17-month low. This follows a string of worst-than-expected macroeconomic data in the UK. The manufacturing PMI came above the 50 mark which still theoretically signals expansion, however, the rate of expansion is decelerating and the odds of a rate hike in May become extremely slim especially in the light of previous UK data which were also a miss in recent weeks: the gross domestic product, inflation, retails sales, and wage growth all came below market's consensus.

“The latest survey provided further evidence of a slowdown in the rate of manufacturing expansion. Growth of output and new orders eased, while business optimism dipped to a five-month low. Falling backlogs of work, supply-chain constraints and rising stocks of finished goods also signaled that output growth will remain subdued in the coming months.” according to Markit. 

Investors will shift their focus to the UK PMI Services on Thursday which should have a greater impact on the Bank of England (BoE) decision as the UK manufacturing PMI only weigh around 10% in the UK economy. However, even if the PMI Services data comes way above expectations it seems doubtful that it will shift around the negative outlook on the UK economy and justify a rate hike at the next BoE meeting in May. 

On the other hand, US stocks are on the back foot which usually fuels demand for the Japanese yen and therefore helps the GBP/ JPY ´s bear case. 

GBP/JPY 4-hour chart

The GBP/JPY is in a bear trend. Resistances are seen at 150.42 swing low and at 150.85 swing high while supports are priced in at 149.14 low of the day and at 148.50 swing low.