British Pound remains weaker against Japanese Yen following UK economic data

GBP/JPY depreciates after registering gains in the previous day, trading around 208.30 during Asian hours on Friday. The currency cross loses ground as the British Pound (GBP) remains subdued against the Japanese Yen (JPY) following the release of key economic data from the United Kingdom (UK).

The UK Office for National Statistics (ONS) reported on Friday that the UK Gross Domestic Product (GDP) grew by 0.4% month-over-month in July, outperforming market expectations for a flat 0% growth and building upon the 0.3% expansion recorded in June. In addition to the strong GDP figures, broader economic output data showed positive momentum, with monthly Industrial Production rising by 0.2% and Manufacturing Production increasing by 0.9% over the same period.

Meanwhile, the Japanese Yen (JPY) continues to draw support from growing expectations of more aggressive policy tightening by the Bank of Japan (BoJ), alongside the ongoing unwinding of carry trades and increased capital repatriation. However, the currency's upside potential remains constrained. Surging oil prices, fueled by persistent conflict between the US and Iran with no signs of de-escalation, are keeping global inflation risks elevated and weighing on broader market sentiment.

BoJ seen lifting rates again as ING flags persistent price pressures

Economists at ING expect the Bank of Japan to press ahead with further policy normalisation this week, forecasting that the BoJ will “raise its policy rate by 25bp to 1.25% on Friday amid persistent price pressures.” They argue that ongoing inflation dynamics justify another step away from ultra-loose settings, reinforcing expectations that Japan’s rate cycle is gradually shifting onto a more conventional tightening path.