British Pound rebounds against Japanese Yen at the start of a UK data-packed week

The British Pound bounces back against the Japanese Yen after a two-day correction.
Investors brace for high volatility in the British Pound ahead of a data-packed week in the UK.
The BoJ is expected to leave interest rates unchanged in the policy meeting next week.

Sagar Dua FXStreet

The British Pound (GBP) snaps a two-day correction against the Japanese Yen (JPY) on Monday, rebounding to near 218.60 during the European trading session. The cross faced selling pressure in the past two trading days after profit-booking near multi-year highs at 219.61.

This week, the British currency is expected to remain highly volatile as a slew of United Kingdom (UK) economic data is scheduled to be published. In the data-pack week, investors will pay close attention to the employment data on Tuesday, Consumer Price Index (CPI) data on Wednesday, and Retail Sales and preliminary Purchasing Managers’ Index (PMI) data on Friday.

The impact of employment and inflation is expected to be significant on market expectations for the Bank of England’s (BoE) monetary policy announcement next week.

On Tuesday, the Office for National Statistics (ONS) will likely show that the ILO Unemployment Rate remained steady at 4.9%. Average Earnings Excluding Bonuses, a key measure of wage growth, is expected to have grown steadily by 3.4% Year-on-Year (YoY).

The UK core CPI – which excludes volatile components of food, energy, alcohol and tobacco – is estimated to have grown at a moderate pace of 2.5% against the previous reading of 2.6%.

Signs of inflationary pressures cooling down are likely to boost expectations of an interest rate cut by the BoE in the near term.

On the Japanese Yen front, the Bank of Japan (BoJ) is expected to leave interest rates unchanged at 1% in the policy meeting next week, according to a report from Kyodo. The report also showed that officials still see the need for back-to-back interest rate hikes in the near term.

Economic Indicator

Core Consumer Price Index (YoY)

The United Kingdom (UK) Core Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. The YoY reading compares prices in the reference month to a year earlier. Core CPI excludes the volatile components of food, energy, alcohol and tobacco. The Core CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Why it matters to traders?

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

GBP/USD tumbles to three-day lows around 1.3420

GBP/USD comes under extra selling pressure and revisits the area of multi-day lows near 1.3420 in quite a bearish start to the week. Cable’s decline comes amid the firmer Greenback as investors continue to assess developments in the US-Iran conflict. Moving forward, attention will turn to the UK employment report on Tuesday.

EUR/USD meets some initial contention around 1.1400

EUR/USD keeps the bearish bias well in place, slipping back toward the 1.1400 region, where some initial support appears to have turned up. The auspicious start to the week of the US Dollar has kept the risk complex under pressure as investors has continued to closely follow developments from the Middle East conflict. The release of the ZEW Economic Sentiment in the Euroland and Germany are next on tap on the domestic calendar.

Gold holds above $4,000 as inflation-driven Fed hike bets cap upside

Gold holds steady above $4,000 during the Asian session on Tuesday, though the upside potential seems limited. Inflation fears stemming from elevated oil prices reaffirm bets for higher US interest rates, which, along with an escalation in the Middle East war, continue to underpin the safe-haven US Dollar. This should act as a headwind for the non-yielding bullion, warranting caution for bullish traders before positioning for any meaningful gains.

Bitcoin climbs above $65K as ETF flows recover despite rising macro risks

Bitcoin (BTC) has climbed above $65,000 on Monday as improving onchain activity, recovering US spot Bitcoin exchange-traded fund (ETF) flows, and stabilizing derivatives point to a more balanced market, according to Glassnode.

Here's where the Canadian Dollar is headed next: 4 bearish scenarios and a bullish one

The Canadian Dollar (CAD) has ridden a volatile first half of the year, with Oil prices surging and then falling as markets danced to the Middle East’s tune. Neither the Bank of Canada nor the Federal Reserve has changed rates so far this year, and the USD/CAD's next move may depend on which of the two banks fails to deliver what markets expect.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.