GBP/JPY rises to near 214.60 as Yen underperforms at the start of the week

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The GBP/JPY pair trades higher to near 214.60 during the European trading session on Monday. The pair gains as the Japanese Yen (JPY) underperforms its peers amid uncertainty surrounding the Bank of Japan’s (BoJ) interest rate decision, which will be announced on April 28.

GBP/JPY moves higher to near 214.60 as BoJ policy uncertainty weighs on the Japanese Yen.
Investors await the UK employment and inflation data.
BoE’s Bailey sees no rush for monetary policy adjustments despite the energy supply shock.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.01%	0.04%	0.16%	-0.00%	0.23%	0.22%	0.07%
EUR	-0.01%		0.03%	0.11%	-0.02%	0.20%	0.21%	0.04%
GBP	-0.04%	-0.03%		0.09%	-0.04%	0.16%	0.18%	-0.00%
JPY	-0.16%	-0.11%	-0.09%		-0.14%	0.08%	0.03%	-0.10%
CAD	0.00%	0.02%	0.04%	0.14%		0.22%	0.19%	0.03%
AUD	-0.23%	-0.20%	-0.16%	-0.08%	-0.22%		-0.01%	-0.19%
NZD	-0.22%	-0.21%	-0.18%	-0.03%	-0.19%	0.01%		-0.16%
CHF	-0.07%	-0.04%	0.00%	0.10%	-0.03%	0.19%	0.16%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

Investors doubt that the BoJ will deliver an interest rate hike amid the worsening economic outlook in the wake of the negative energy shock.

BoJ Governor Kazuo Ueda said on Friday that Japan is facing rising inflation from a "negative supply shock," which is more difficult to rein in with monetary policy than inflation driven by strong demand.

This week, investors will focus on the National Consumer Price Index (CPI) data for March, which will be released on Friday. National CPI ex. Fresh Food is expected to arrive higher at 1.8% Year-on-Year (YoY) against the previous reading of 1.6%.

Meanwhile, the Pound Sterling (GBP) exhibits a mixed performance at the start of the United Kingdom (UK) data-packed week. Investors will pay close attention to the UK labor market data for the three months ending February and the CPI data for March, which will be released on Tuesday and Wednesday, respectively.

The employment report is expected to show that wage growth cools down, and the ILO Unemployment Rate remained steady at 5.2%. While the inflation data is expected to have grown at a faster pace.

On the monetary policy front, Bank of England (BoE) Governor Andrew Bailey has stated that there is no rush for a monetary policy adjustment in the upcoming policy meeting on April 30, despite having a “very big negative shock”, Reuters reports.

We’re not going to rush to judgments on those things, because there are a lot of uncertainties around this, not just how it’s going to play out, but also how it’s going to pass through into the UK economy," Bailey said at the International Monetary Fund (IMF) meeting in Washington last week.

Economic Indicator

Consumer Price Index (YoY)

The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Why it matters to traders?

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

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