GBP/JPY holds gains around 191.50 following UK employment data

GBP/JPY strengthens following the release of the UK employment data.
The ILO Unemployment Rate remained unchanged at 4.4% in the three months ending in December.
Japanese Yen depreciates due to increased market optimism following the postponement of Trump's reciprocal tariffs.

Akhtar Faruqui FXStreet

GBP/JPY halts its three-day losing streak, trading around 191.50 during the early European hours on Tuesday. The currency cross finds fresh demand on the release of the employment data from the United Kingdom (UK).

The Office for National Statistics (ONS) reported on Tuesday that the ILO Unemployment Rate held steady at 4.4% in the three months leading up to December, aligning with previous figures. Market expectations had anticipated a slight increase to 4.5%.

Claimant Count Change, showing that the number of people claiming jobless benefits, climbed by 22K in January, compared with a revised drop of 15.1K in December, missing the estimated 10K figure. The Employment Change data for December came in at 107K versus November’s 35K.

The GBP/JPY cross also appreciates as the Japanese Yen (JPY) loses ground amid increased market optimism due to the postponement of the implementation of US President Donald Trump's reciprocal tariffs.

However, the Japanese Yen may regain its ground amid increased hawkish sentiment surrounding the Bank of Japan’s (BoE) policy outlook, driven by a robust Japan’s Gross Domestic Product (GDP) report that exceeded expectations.

Markets are now pricing-in an additional 37 basis points rate increase by the Bank of Japan in 2025, driving the yield on the benchmark 10-year Japanese government bond to its highest level since April 2010.

Economic Indicator

ILO Unemployment Rate (3M)

The ILO Unemployment Rate released by the UK Office for National Statistics is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the UK Economy. If the rate goes up, it indicates a lack of expansion within the UK labor market. As a result, a rise leads to a weakening of the UK economy. Generally, a decrease of the figure is seen as bullish for the Pound Sterling (GBP), while an increase is seen as bearish.

Why it matters to traders?

The Unemployment Rate is the broadest indicator of Britain’s labor market. The figure is highlighted by the broad media, beyond the financial sector, giving the publication a more significant impact despite its late publication. It is released around six weeks after the month ends. While the Bank of England is tasked with maintaining price stability, there is a substantial inverse correlation between unemployment and inflation. A higher than expected figure tends to be GBP-bearish.

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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