• GBP/JPY stalls a one-week-old uptrend as bulls turn cautious ahead of UK jobs data.
• The BoJ rate hike uncertainty continues to undermine the JPY and supports the cross.
• Dovish BoE expectations and the UK’s fiscal concerns act as a headwind for spot prices.

The GBP/JPY cross enters a bullish consolidation phase and holds steady above the 203.00 round figure, near a two-week peak, touched during the Asian session on Tuesday. Traders now seem reluctant and opt to wait for the release of the UK employment details before positioning for an extension of the recent bounce from the 199.00 neighborhood, or a one-month low touched last week.

The crucial UK jobs report could make it easier to justify a Bank of England (BoE) rate cut next month as the Unemployment Rate in the three months to September is expected to creep higher to 4.9%, which would be the highest level since 2021. Any further signs of a slack in the UK labour market would back the case for more easing by the BoE on the back of softer inflation. This, along with concerns about the UK's fiscal situation, holds back traders from placing aggressive bullish bets around the British Pound (GBP) and caps the GBP/JPY cross.

The Japanese Yen (JPY), on the other hand, continues with its relative underperformance amid the Bank of Japan (BoJ) rate hike uncertainty. In fact, a summary of BoJ policymakers' opinions at their October meeting released on Monday reflected that there was some uncertainty over the effect of new Prime Minister Sanae Takaichi’s policies on the economy and prices. Moreover, board members suggested the fallout from higher US tariffs and Japanese companies' wage momentum as key factors in deciding the timing of the next interest rate hike.

Adding to this, BoJ’s Junko Nakagawa said on Monday that the central bank will proceed cautiously with policy decisions. This, along with the upbeat market mood, is seen undermining the JPY's safe-haven status and offering some support to the GBP/JPY cross. However, expectations that Japanese authorities might intervene to stem further weakness in the domestic currency act as a headwind for the currency pair ahead of the UK macro data. Hence, it will be prudent to wait for strong follow-through buying before positioning for any further gains.