The British Pound (GBP) is experiencing some slight selling pressure against the Japanese Yen (JPY), falling to around 208.60 on Tuesday. This comes on the heels of the latest labor market data from the United Kingdom, covering the three months leading up to July.
The Office for National Statistics (ONS) reported that the ILO Unemployment Rate held steady at 4.9%, despite expectations for it to rise to 5%. During this period, the economy added 67,000 new jobs, which is a drop from the 83,000 recorded in the previous three months ending in June.
In terms of wage growth, Average Earnings Excluding Bonuses increased by 3.5% Year-on-Year (YoY), aligning with predictions. On the other hand, the measure that Includes Bonuses also rose by 3.9%, which is a slowdown compared to the prior figure of 4.2%, revised up from 4.1%.
This consistent wage growth data is, I think, unlikely to significantly influence the Bank of England’s (BoE) expectations regarding interest rates.
This week, the major factors to watch for the Pound Sterling include the Consumer Price Index (CPI) data for August and the policy decisions from the BoE scheduled for Wednesday and Thursday, respectively.
Strategists at Scotiabank note that market participants are looking toward Thursday’s BoE meeting, where it’s widely anticipated that policymakers will opt for a cautious hold, leaning toward a potential 25 basis point hike in early November.
Meanwhile, on the Tokyo side of things, investors are keenly awaiting the Bank of Japan’s monetary policy outcome, which is set for Friday.
BoJ expected to deliver preemptive hike while moderating hawkish stance
Analysts from Standard Chartered believe that at the upcoming meeting on September 17-18, the BoJ will likely continue its path toward normalization, projecting a 25 basis point increase in the policy rate, bringing it to 1.25%. However, they emphasize that officials will probably temper any overly hawkish messages as they navigate tightening measures against Japan’s structurally modest growth and fiscal limitations.
