The GBP/JPY currency pair was seen to fail to continue its mid-week rally which shrank until the close of the New York trading session on Friday.
Investors will look to Tuesday's release of UK manufacturing and services (PMI) data to assess the current performance of the increasingly worrying UK economy.
In addition, UK inflation which rose to its latest 40-year high of 10.1% in July will fuel expectations for the Bank of England (BOE) to raise interest rates by another 50 basis points in September.
Investors expect the BOE to raise its key interest rate by half a percentage point to 2.25% at its September meeting, which would be the seventh consecutive rate hike and push borrowing costs to the highest level since 2008.
The BOE delivered a 50 basis point rate hike in August for the first time since 1995 and projected inflation to peak at 13.3% in October and the country to enter a recession in the fourth quarter and last for five quarters.
Looking at the price movement on the chart of the GBP/JPY currency pair for the past week, the trading session at the beginning of the week until the middle of the week is seen to have managed to make a jump of around 350 pips before being limited to the 163,500 zone.
The strengthening was seen to fail to continue after the release of UK inflation data which rose to the highest level in 40 years, then prices began to shrink again slowly until the close of Friday's trading session.
Continuing at the opening of the Asian trading session at the beginning of this week, it was seen that the price made a slight increase but then shrunk again after the opening of the European session when it failed to cross the Moving Average 50 (MA50) obstacle level on the 1-hour time frame on the GBP/JPY chart.
If the decline continues, the price is expected to drop down to the 160,500 zone that was tested at the beginning of last week which is seen to have successfully rebounded the price.
On the other hand, if there is a rebound and the price crosses the MA50 barrier level and the 162,000 zone, investors are positive for the price to rise again after the trend change signal.
The price that continues to rise will retest the resistance zone at 163.500 before a higher increase is targeted at the height of 164.500 which makes the price focus zone to record the latest 4-week high level.
