The GBP/JPY cross has gained for the third day in a row. This is due to a weaker Japanese Yen and mostly good UK economic data. The pair has kept its gains near a one-week high, but is still below 193.00.
The UK economy grew by 0.1% in the last three months of 2024. This was a surprise after no growth in the previous quarter. The economy grew by 1.4% for the year in Q4.
This was better than the 1.1% growth expected and the 0.9% in Q3. UK industrial and manufacturing output also rose more than expected in December. These positive numbers have given a small boost to the British Pound.
This continues to push the GBP/JPY higher.
Recent UK data propels GBP/JPY
However, a positive mood in stock markets has hurt demand for the safe-haven Yen.
But expectations that the Bank of Japan might raise rates again, supported by strong Japanese producer prices, could stop the Yen from falling too much. The Bank of England’s careful outlook might also limit gains for the GBP/JPY. The UK central bank recently cut its 2025 growth forecast from 1.5% to 0.75%.
BoE Governor Andrew Bailey has also hinted that more rate cuts could happen. This may reduce investor excitement for the Pound. Strong continued buying will be needed to confirm the GBP/JPY has bottomed out around 187.00.
This was its lowest level since September 2024. In summary, the GBP/JPY has recovered well due to good UK data and a weaker Yen. But uncertainty about future BoJ and BoE policies could keep gains limited.