British Pound drops against Japanese Yen after UK labor market data

The British Pound (GBP) faces slight selling pressure against the Japanese Yen (JPY), dropping to near 208.60 on Tuesday after the release of the United Kingdom (UK) labor market data for three months ending July.

The Office for National Statistics (ONS) has reported that the ILO Unemployment Rate remained steady at 4.9%, while it was expected to increase to 5%. In the quarter ending July period, the economy created 67K fresh jobs, lower than 83K in three months ending June.

Average Earnings Excluding Bonuses, a key measure of wage growth, rose steadily by 3.5% Year-on-Year (YoY), as expected. The wage growth measure Including Bonuses also grew in line with estimates of 3.9%, slower than the previous reading of 4.2%, revised higher from 4.1%.

Steady wage growth data is unlikely to have a meaningful impact on Bank of England’s (BoE) interest rate expectations.

This week, major triggers for the Pound Sterling are the Consumer Price Index (CPI) data for August, and the BoE’s policy decision on Wednesday and Thursday, respectively.

Strategists at Scotiabank bote that market participants look to Thursday’s BoE where policymakers are widely expected to deliver a hawkish hold while leaning toward a 25bpt hike at the next meeting in early November.”

On the Tokyo front, investors await Bank of Japan’s monetary policy outcome on Friday.

BoJ seen delivering pre-emptive September hike while tempering hawkish tone

Analysts at Standard Chartered expect the BoJ to take another step along its normalisation path at the 17-18 September meeting, forecasting that the central bank will "raise the policy rate by 25bps to 1.25%," but stress that officials are likely to "avoid an overly hawkish message" as they balance further tightening with Japan’s structurally modest growth outlook and fiscal constraints.