• GBP/JPY stages a goodish intraday recovery from a one-and-a-half week low set earlier today.
• Spot prices get an additional lift following the release of mostly upbeat UK employment data.
• The UK-Japan rate differential remains supportive of the move up ahead of the BoE decision.

The GBP/JPY cross builds on its steady intraday recovery from a one-and-a-half-week low, touched earlier this Thursday, and reclaims the 214.00 mark following the release of the UK monthly employment details.

The UK Office for National Statistics (ONS) reported that the ILO Unemployment Rate unexpectedly edged lower from 5.0% to 4.9% in the three months to April. Furthermore, Average Earnings, excluding Bonus, grew by 3.4% YoY during the three months to April versus estimates for a 3.2% rise, while Average Earnings, including Bonus, climbed 4.4% during the reported period, also surpassing the consensus forecast  of 4.0%. This offsets a rise in the number of people claiming jobless benefits from a revised 8.3K  to 31.2K in May, providing a modest lift to the British Pound (GBP) and the GBP/JPY cross.

The Japanese Yen (JPY), on the other hand, continues with its relative underperformance in the wake of a persistently wide rate differential between Japan and other major economies, including the UK. This keeps the carry trade active and overshadows the Bank of Japan's (BoJ) historic rate hike on Tuesday, to the highest level since 1995, and turns out to be another factor acting as a tailwind for the GBP/JPY cross. Meanwhile, the JPY bears remain on high alert amid speculations that Japanese authorities will step in again to prop up the domestic currency, which might cap further upside for the currency pair.

In fact, Japan's top foreign exchange diplomat, Atsushi Mimura, and Finance Minister Satsuki Katayama have issued repeated warnings that Tokyo is monitoring speculative moves and remains fully prepared to curb further JPY weakness. Traders might also refrain from placing aggressive directional bets around the GBP/JPY cross and opt to wait for the crucial Bank of England (BoE) policy update later today amid diminishing odds for a more aggressive policy tightening. In fact, BoE rate hike bets cooled following the release of softer-than-expected UK consumer inflation figures on Wednesday.

Heading into the key central bank event risk, the aforementioned mixed fundamental backdrop makes it prudent to wait for strong follow-through buying before positioning for any further appreciating move for the GBP/JPY cross.