GBP/JPY oscillates around 163.00 ahead of UK Employment data, the focus is on BOE and BOJ
- GBP/JPY is hovering around 163.00 ahead of the UK labor data.
- The show-stopper events this week will be interest rate policies from BOE and BOJ.
- A rate hike by 25 bps is expected by the BOE while the BOJ will stick to its ultra-loose policy.
The GBP/JPY pair is displaying back and forth moves in a narrow range of 162.83-163.24 in the Asian session. A lackluster performance in the cross is backed by uncertainty over the release of the UK Employment data. The asset has remained in the negative trajectory from the last week, however, a minor bounce has been witnessed on Monday after hitting a low of 162.25.
Investors are awaiting the release of the UK Employment data, which is expected to improve marginally. The Claimant Count Change is expected to shift lower to -42.5k against the prior print of -56.9k. Also, the Unemployment Rate is likely to fall to 3.6% from the former figure of 3.7%. An improvement in the labor market data will underpin the pound bulls against the Japanese yen for a limited horizon. However, the attention-seeking events will be the monetary policy announcement from the Bank of England and the Bank of Japan (BOJ).
As per the Reuters poll, a rate hike by 25 basis points (bps) is expected by the BOE, which will push the rates to 1.25%. Considering the momentum of price pressures in the UK zone, a rate hike is necessary, however, lower growth forecasts have left a little room for a quarter-to-a-percent bps only. Also, the economic activities in the UK area have underperformed in May. The Gross Domestic Product (GDP) slipped to -0.3% against the expectation of 0.2%. Also, the annual Manufacturing Production figure tumbled to 0.5 vs. 1.8% expected.
On the Japanese yen front, the BOJ is expected to stick to a prudent monetary policy despite advancing price pressures. The inflation rate in Japan's economy has increased above 2%, however, the price pressures are majorly dictated by soaring oil prices.