During the early European session on Tuesday, the GBP/JPY cross continues its positive trajectory for the third consecutive day, hovering around 200.10. Despite experiencing a slight dip following mixed UK employment data, investor focus now shifts to the upcoming Bank of Japan (BoJ) monetary policy meeting scheduled for Friday.
Recent figures released by the UK Office for National Statistics revealed that the ILO Unemployment Rate climbed to 4.4% in the three months to April, exceeding market expectations of 4.3%. Additionally, the number of individuals claiming jobless benefits surged by 50.4K in May, compared to an increase of 8.4K in April. Notably, the UK Employment Change recorded a decrease of -140K in the same period, improving from the previous reading of -177K.
On a positive note, the UK Average Earnings excluding Bonus exhibited a 6.0% year-on-year increase in April, surpassing March’s 6.0% rise. Similarly, the Average Earnings including Bonus rose by 5.9% during the same period, exceeding the consensus forecast of 5.7%. However, the Pound Sterling (GBP) encountered mild selling pressure in response to the mixed employment data.
Anticipation mounts ahead of the BoJ’s policy meeting, with nearly two-thirds of economists surveyed in a Reuters poll on Tuesday expecting the central bank to initiate tapering of its monthly bond purchases. While the BoJ is anticipated to maintain its short-term interest rate at 0.0%–0.1%, investor focus will center on the central bank’s statement. A dovish stance from the BoJ could potentially weigh on the Japanese Yen (JPY) and provide a favorable backdrop for the GBP/JPY cross. Investors will be keenly monitoring the outcome of the meeting for further market direction.
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