GBP/JPY remains close to the annual maximums while Bailey points out the persistent inflation, the box

• The GBP/JPY crossing is traded near maximums of the year in 198.30, with an increase of more than 3.6% in the week.
• Bailey del Boe points out a “gradual and careful” approach, says inflation remains persistent.
• The United Kingdom labor market shows signs of slack, supporting the expectations of disinflation and rate cuts.

The sterling pound (GBP) is modestly strengthened in front of the Japanese Yen (JPY) on Thursday, with the GBP/JPy par quoting near maximums of the year. Although the profits are limited, the crossing is still backed by a technical configuration in general bullish, keeping the upward trend intact.

Although the GBP/JPY torque attracted some sales pressure early in the day, buyers intervened during the American session, reversing the intradic fall. The crossing is currently quoted around 198.35, just below Wednesday’s maximum, and continues to rise almost 3.65% in the week.

Speaking at the Annual Global Conference of the British Chambers of Commerce in London on Thursday, the governor of the Bank of England (BOE), Andrew Bailey, offered a caution but balanced evaluation of the United Kingdom’s economy. He acknowledged that, although a “significant progress” has been achieved in disinflation, with general inflation increasing to 3.4% in May and is expected to remain around 3.5% in autumn, inflationary pressures remain persistent, particularly in basic components such as services and foods. “Monetary policy needs to remain restrictive the sufficient time to eliminate the remaining persistence in inflationary pressures,” Bailey said, reiterating that the BOE approach will continue to be “gradual and careful” instead of following a “pre -established path.”

Bailey also pointed out a weakened labor market, with data that show more than 100,000 workers less on payroll in May and companies reducing hiring in response to the increase in national insurance costs. “We are seeing that the slack opens,” he observed, framing the trend as a key deflation force. On the broader economic perspectives, he emphasized that low and stable inflation remains the most important contribution that monetary policy can make sustainable growth in the long term. His comments, although not openly moderate, reinforced the expectations of a cautious relief later this year, helping to maintain the sterling pound supported near their maximums of the year against Yen.

On the other hand, the Japanese Yen trajectory is still closely linked to the cautious position of normalization of the Bank of Japan (BOJ) amid increasing inflationary pressures. Although the Japan Consumer Price Index (CPI) has increased, driven by the highest costs of food and energy, Governor Kazuo Ueda and the Boj Board are still divided over how aggressively respond. The member of the Hard Line Board, Naoki Tamura, suggested this week that the Central Bank may need to consider “decisive” rates if inflation persists, reflecting a growing concern for the dynamics of underlined cost pressure. However, Ueda has reiterated a data -dependent approach, emphasizing that any additional hardening will depend on the sustained growth of salaries and a stable inflationary trend above the 2% target of the BOJ.

Although the BOJ ended its negative interest rates policy, the current rate remains in only 0.5%, still well below that of its global peers. This has eroded the traditional attractiveness of Yen’s “safe shelter”. While persistent inflation supports a gradual change towards greater hardening, the measured rhythm of the BOJ has kept the defensive, limiting its ability to compensate for the strength of the pound and pushing the GBP/JPY towards new maximums of the year.

Looking ahead, Japan will publish key economic data on Friday, including the June Tokyo CPI, May unemployment rate and retail trade.