GBP/JPY struggles ahead of BoE rate decision

Currently suffering, the GBP/JPY pair is trading close to the day’s low of 182.80. The UK’s August CPI, which is anticipating a 0.7% increase over the 0.4% fall from the previous month, will be revealed early on Tuesday. On Thursday, the BoE is anticipated to increase the benchmark interest rate by 25 basis points to 5.5%.

On Friday, the Bank of Japan is likewise expected to maintain its interest rate at -0.1%. The BoJ’s negative rate cycle has been a crucial aspect of the Japanese economy as it tries to establish basic long-term growth. Although price hikes in Japan suddenly spiked in recent months, the fourth quarter is likely to see a decline in price growth. The goal of the Japanese central bank will be to maintain inflation over its 2% minimum target.

The UK Retail sales data for August is also expected to rise 0.5%. Preliminary UK Consumer Price Index (CPI) figures are also slated for Friday, with the Manufacturing PMI forecasting a steady at 43 and the Services PMI component slightly lower from 49.5 to 49. Any upside surprises for inflationary data could send the GBP soaring against the JPY, as spiraling costs will mean the BoE still has hurdles to overcome using further hikes.

Despite the near-term flattening for the Guppy, the GBP/JPY pair remains firmly at the top end of the charts. The Sterling has made gains against the Yen for the past eight months, rising firmly from January’s lows near 155.35.