- GBP/JPY gauges an intermediate cushion near 190.40 as the BoE sees no rush for rate cuts.
- UK’s high wage growth and service inflation keep the inflation outlook stubborn.
- Japan’s National CPI remains higher at 2% than expectations.
In Wednesday’s European session, the GBP/JPY pair discovered a temporary support around 190.40. The overall sentiment remains positive as the Bank of England (BoE) shows reluctance towards immediate rate cuts, citing a persistent inflation outlook.
BoE policymakers express the need for more evidence to build confidence in the sustained return of inflation to the 2% target before considering interest rate reductions.
During the latest monetary policy meeting, BoE Deputy Governor Dave Ramsden, who advocated for maintaining interest rates at 5.25%, emphasized the importance of assessing how long inflation will persist. Ramsden indicated that the duration of persistent inflation will influence the duration of maintaining interest rates at 5.25%.
The British Retail Consortium (BRC) reported a retreat in annual shop price inflation to 2.5% in February, the lowest since March 2022, providing some relief to households. However, robust wage growth and elevated service inflation continue to contribute to the sticky outlook of consumer price inflation.
With a light economic calendar in the United Kingdom this week, market expectations for BoE rate cuts will guide the Pound Sterling’s movements.
Simultaneously, the Japanese Yen sees buying interest amid Japan’s inflation proving more resilient than anticipated in January. The annual National Consumer Price Index (CPI) increased by 2.0%, surpassing expectations of 1.8%, although it decelerated from December’s 2.3% reading.
