Overview
The GBP/JPY cross consolidates gains at 184.80 before the UK Consumer Price Index release. UK employment data shows a decline in employment but robust earnings growth. Market participants are cautious due to the Bank of England’s monetary policy amid the fragile economy. Japan’s Q2 GDP figures exceeded expectations, showing 1.5% QQ and 6.0% annually. Japan’s Economy Minister emphasises monitoring global economic conditions and price impacts. Investors will also watch Japan’s Trade data and National Consumer Price Index for July.

GBP/JPY cross gains near 184.80 in Asian session; markets become cautious before UK CPI data announcement.

UK unemployment rate fell from 4% to 4.2%, with 66,000 fewer people working than projected. In the three months leading up to June, average earnings grew 7.8% year on year, reaching 8.2%, the greatest growth rate since 2001. Unemployment increased from 4% to 4.2%..

The UK economy is vulnerable due to a 15-year high interest rate and a 15-year high interest rate. Market players are wary of the BoE’s aggressive monetary policy, which could harm the economy. The UK Consumer Price Index and Retail Sales MoM for July will serve as indicators, potentially strengthening the Pound Sterling and supporting the GBP/JPY cross.

Japanese GDP expanded by 1.5% QoQ in Q2, surpassing expectations and historical averages of 0.7%. Annualised GDP reached 6.0%, up from 3.1% and 2.7%.

Japan’s Economy Minister, Shigeyuki Goto, predicted a modest economic recovery after stronger than expected statistics. He warned against a worldwide recession and rising prices. However, the Bank of Japan’s dovish approach and the Bank of England’s hawkish posture are at odds, causing the Japanese Yen to lose strength relative to its main rivals.

Investors closely monitor UK CPI, expecting 6.8% annual inflation decline; Japanese trade data and National Consumer Price Index will be released later.

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