GBP/JPY steadies near 198.00 as Yen weakens, UK PMI signals slowdown

• GBP/JPY consolidates near 198.00 after rebounding from Thursday's two-month low around 197.50.
• The Yen weakens as Japan's August Unemployment Rate climbs to 2.6%, beating the 2.4% forecast and rising from 2.3% in July.
• Sterling struggles to gain traction after UK Composite PMI drops to a five-month low of 50.1; Services PMI softens to 50.8.

The GBP/JPY steadies on Friday, snapping a four-day losing streak after sliding to its lowest level since August 7 on Thursday. At the time of writing, the cross is holding firm near the 198.00 handle, easing back from an intraday high around 198.55.

The Japanese Yen (JPY) came under pressure earlier in the Asian session after domestic data disappointed, with the August Unemployment Rate rising to 2.6% exceeding the forecast of 2.4% and up from 2.3% in July.

The British Pound (GBP), however, struggled to capitalize on the Yen's weakness as the latest UK Purchasing Managers Index (PMI) figures signaled slowing economic momentum. The S&P Global Composite PMI slipped to 50.1 in September, down from 53.5 in August, while the Services PMI eased to 50.8, falling short of the 51.9 forecast and marking a sharp pullback from August's 16-month high of 54.2.

From a technical perspective, GBP/JPY is attempting to stabilize above the 198.00 mark after a sharp pullback this week. A decisive break below 198.00 would turn the spotlight toward the previous day's low at 197.50, and further weakness could deepen the correction toward the 196.24 low from August 7.

On the upside, 198.50 acts as the first line of resistance, closely aligned with the 21-period Simple Moving Average (SMA) at 198.38, maintaining the near-term outlook bearish bias as long as prices remain below it. If buyers manage to pierce this level, attention would quickly turn to the 199.00 mark, where the 50-period SMA resides as the next key hurdle for a bullish reversal.

Momentum indicators still lean in favour of sellers. The Relative Strength Index (RSI) has rebounded from oversold territory seen earlier this week but remains below the neutral 50 mark, suggesting that upside momentum is still limited unless the RSI climbs above 55. Meanwhile, the Average Directional Index (ADX), hovering near 30.5, indicates that the recent downtrend retains moderate strength despite the current pause.