- GBP/JPY recovery appears to have slowed near 200.00 as UK Inflation comes under the spotlight.
- The UK annual headline inflation is expected to return to BoE’s 2% target.
- The BoJ postponed plans to reduce bond-buying operations.
The GBP/JPY pair struggles to extend recovery above the psychological resistance of 200.00 in Tuesday’s New York session. The cross is expected to trade sideways as investors shift focus to the United Kingdom (UK) Consumer Price Index (CPI) data for May, which will be published on Wednesday.
Economists expect that the UK Office for National Statistics (ONS) will report a sharp decline in the annual core CPI, which strips off the more volatile items, to 3.5% from 3.9% in April. In the same period, the headline inflation is expected to return to the bank’s target of 2.0% from the prior reading of 2.3%. The monthly headline inflation is estimated to have grown at a faster pace of 0.4% from 0.3% in April.
A more-than-expected decline in UK inflation data will boost expectations of early rate cuts by the Bank of England (BoE). Though headline inflation is expected to return to 2%, investors will keenly focus on service inflation, which has been a major barrier to the BoE’s move towards policy normalization.
Inflation in the UK service sector is majorly driven by strong growth, which has turned out to be persistent in the past few months. Average earnings excluding bonuses, which is a measure of wage inflation, have grown steadily by 6.0% for a straight three-period period. The pace at which wages are growing is significantly higher than what is needed to build confidence among BoE officials to consider rate cuts.
On the Tokyo front, the Japanese Yen is weak across the FX domain as the Bank of Japan (BoJ) pushes plans of tapering bond-buying operations to the July meeting. BoJ Governor Kazuo Ueda left interest rates unchanged but didn’t rule out expectations for further policy tightening in July.
This week, the major trigger for the Japanese Yen will be the National CPI data for May, which will be published on Friday. National CPI excluding Fresh Food is estimated to have accelerated to 2.6% from the prior reading of 2.2% on a year-on-year basis.
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
EUR/USD corrects sharply toward 1.0950 ahead of US NFP, Powell
EUR/USD is extending its correction toward 1.0950 in the European session on Friday. The US Dollar has come up for air after the trade war and recession fears-led sell-off, weighing on the pair. Traders look to the US NFP report and Fed Chair Powell's speech for fresh directives.
GBP/USD remains heavy near 1.3000, US NFP data awaited
GBP/USD is battling 1.3000, under heavy selling pressure in European trading on Friday. Traders resort to profit-taking on their US Dollar short positiions, re-adjusting ahead of the critical US Nonfarm Payrolls data and Fed Chair Powell speech.
Gold price sticks to negative bias around $3,100; bears seem non-committed ahead of US NFP report
Gold price meets with a fresh supply on Friday, though the downside potential seems limited. Trump’s tariffs-inspired risk-off mood might continue to act as a tailwind for the precious metal. Fed rate cut bets weigh on the USD and also contribute to limiting losses for the XAU/USD pair.
Nonfarm Payrolls forecast: US jobs growth set to slow in March amid growing worries over US tariffs
Nonfarm Payrolls are forecast to rise by 135K in March, following a 151K gain reported in February. The United States Bureau of Labor Statistics will release the jobs data on Friday at 12:30 GMT. US labor data could impact the Fed’s interest rate path, potentially affecting the US Dollar's price action.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
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.