Ella 
The GBP/JPY pair ended a five-day losing streak and was trading around 191.90 during Asian trading on Thursday. Economic data releases from the United Kingdom (UK) remain sparse and the calendar for the coming week is expected to be equally light.
As a result, Sterling (GBP) may be affected by market expectations for the Bank of England’s (BOE) interest rate decision in December. The GBP/JPY cross is likely to find support as Bank of England officials favor gradual easing.
Speaking at King’s Business School on Monday, Bank of England deputy governor Clare Lombardelli stressed the need for clearer signs that inflationary pressures have eased before considering further cuts.
Deputy Governor Lombardelli also warned of the risks associated with inflation remaining above the Bank of England’s target. She highlighted concerns that wage growth holding steady at 3.5%-4.0% and the consumer price index (CPI) hovering around 3% rather than the 2% target could pose significant policy challenges.
The GBP/JPY cross may face headwinds to the upside as the Japanese yen (JPY) finds support amid growing expectations that the Bank of Japan (BoJ) will hike interest rates again as early as next month. Market confidence has shifted, with the probability of a 25 basis point rate hike in December rising to about 60%, compared with around 50% a week ago.
In addition, Bank of Japan Governor Kazuo Ueda recently hinted at the possibility of tightening monetary policy, highlighting concerns about long-term yen weakness. Investors are currently keeping a close eye on Tokyo inflation data due to be released on Friday as the data could provide important clues on the direction of the Bank of Japan’s policy.
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