• GBP/JPY plunges to near 207.50 as the UK jobless rate rises to 5.2% in the three months ending December.
• Cooling UK wage growth and rising unemployment are expected to boost dovish BoE speculation.
• The Japanese Yen recovers from softer-than-expected GDP growth-driven losses.

The GBP/JPY pair is down almost 0.85% to near 207.50 during the European trading session on Tuesday. The cross faces intense selling pressure as the Pound Sterling plunges after the release of the United Kingdom (UK) labor market data for the three months ending in December.

The Office for National Statistics (ONS) reported that the ILO Unemployment Rate accelerated to 5.2%, the highest level seen in five years. Economists expected the jobless rate to have remained steady at 5.1%. The number of jobs created during the period was 52K, lower than the prior reading of 82K.

Average Earnings Excluding Bonuses, a key measure of wage growth, dropped to 4.2% Year-on-Year (YoY), as expected, from the previous reading of 4.4%, revised lower from 4.5%. Average Earnings Including Bonuses fell to 4.2% from 4.6% in the three months ending in November.

Signs of a weak UK labor market are expected to prompt market expectations supporting interest rate cuts by the Bank of England (BoE) in the near term.

Meanwhile, investors brace for more volatility in the Pound Sterling (GBP) as the UK Consumer Price Index (CPI) data for January is due for release on Wednesday.

On the Tokyo front, the Japanese Yen (JPY) trades broadly firm after recovering steep losses on Monday, which stemmed from weaker-than-projected Gross Domestic Product (GDP) growth seen in the last quarter of 2025. The data showed that the Japanese economy expanded 0.1% against estimates of 0.4%. In the third quarter of 2025, the economy declined by 0.7%, revised from 0.6%.