- GBP/JPY rallies by more than a percent at the end of a strong week.
- UK Retail Sales beat expectations and past prints adding fuel to the rally.
- BoJ strikes dovish tone at meeting but Japanese inflation data hits ten-month high, limiting JPY losses.
GBP/JPY rises over one-and-a-quarter percentage points on Friday, to trade in the 191.80s, as it builds on considerable gains made throughout the week. The pair extends its bullish run following major macroeconomic releases and events affecting both currencies.
The Pound Sterling (GBP) is strengthening overall against the Japanese Yen (JPY), after the release of UK Retail Sales showed shoppers loosening their purse strings in August, data from the Office of National Statistics (ONS) showed on Friday. Retail Sales rose 1.0% MoM in August accelerating the 0.5% rise of July and roundly beating expectations of 0.4%.
The data suggests that shoppers in the UK are unphased by higher borrowing costs and are continuing to spend liberally. This is likely to cause upward pressure on prices and keep inflation elevated. This, in turn, is likely to keep the Bank of England (BoE) from cutting interest rates. By maintaining them at a relatively high level (5.0%) it will help the Pound to strengthen because higher interest rates increase foreign capital inflows.
The Pound gained a leg up on Thursday after the board of the BoE voted eight to one to keep interest rates unchanged at its September meeting. The stance stands in contrast to most other central banks which are lowering interest rates as global inflationary pressures ebb. Sterling probably gained a further boost from the words of BoE policymaker Catherine Mann, who said about policy on Friday, that “it is better to remain restrictive for longer.”
GBP/JPY upside could be limited, however, after inflation data from Japan showed an uptick in consumer prices.
The National Consumer Price Index (CPI) for Japan rose 3.0% YoY in August, according to data from the Statistics Bureau of Japan (SBJ) released overnight. This was higher than the 2.8% of July, and represented a ten-month high for the metric.
National CPI ex Food, Energy, meanwhile, showed a 2.0% YoY rise from 1.9% previously, and National CPI ex Fresh Food a 2.8% YoY rise in August, in line with expectations but higher than the 2.7% of July. The data is likely to keep alive hopes the Bank of Japan (BoJ) will normalize policy by raising interest rates from their relatively low (0.25%) level. With such a move, in turn, helping to strengthen the JPY.
The BoJ concluded its September policy meeting on Friday, and although it left interest rates unchanged – as widely expected – and BoJ Governor Kazuo Ueda struck a cautious tone, citing “high uncertainties surrounding Japan’s economic activity and prices”, the higher inflation readings released at the same time supported the Yen.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks

AUD/USD: Extra gains need to clear 0.6400
AUD/USD rose for the third day in a row, approaching the key 0.6400 resistance on the back of the acute pullback in the US Dollar amid mounting recession concerns and global trade war fear.

EUR/USD: Powell and the NFP will put the rally to the test
EUR/USD gathered extra steam and advanced to multi-month peaks near 1.1150, although the move fizzled out somewhat as the NA session drew to a close on Thursday.

Gold looks offered near $3,100
Prices of Gold remain on the defensive on Thursday, hovering around the $3,100 region per troy ounce and retreating from earlier all-time peaks near the $3,170 level, all against the backdrop of investors' assessment of "Liberation Day".

Interoperability protocol hyperlane reveals airdrop details
The team behind interoperability protocol Hyperlane shared their upcoming token airdrop plans happening at the end of the month. The airdrop will occur on April 22, and users can check their eligibility to receive $HYPER tokens via a portal provided by the Hyperlane Foundation by April 13, the team shared in a press release with CoinDesk.

Trump’s “Liberation Day” tariffs on the way
United States (US) President Donald Trump’s self-styled “Liberation Day” has finally arrived. After four straight failures to kick off Donald Trump’s “day one” tariffs that were supposed to be implemented when President Trump assumed office 72 days ago, Trump’s team is slated to finally unveil a sweeping, lopsided package of “reciprocal” tariffs.

The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.