Anna 
During the early European session on Friday, the GBP/JPY cross edged lower to 191.72, influenced by multiple factors affecting both currencies. The subdued performance of UK Retail Sales weighed on the Pound Sterling (GBP), while escalating tensions between Israel and Iran bolstered demand for safe-haven currencies like the Japanese Yen (JPY), thereby creating a headwind for the GBP/JPY cross.
According to the latest data released by the Office for National Statistics, UK Retail Sales for March registered a 0% month-on-month (MoM) growth, compared to a 0.1% increase in the previous reading. This figure fell short of market expectations of a 0.3% rise. Moreover, Retail Sales excluding fuel declined by 0.3% MoM, contrasting with a 0.3% uptick observed in February. The disappointing Retail Sales figures exerted selling pressure on the Pound Sterling (GBP) against the Japanese Yen (JPY).
On the monetary policy front, Bank of Japan (BoJ) board member Asahi Noguchi remarked on Thursday that future rate hikes are likely to occur at a gradual pace, contingent upon economic data. BoJ Governor Kazuo Ueda also indicated that the central bank may consider raising interest rates again if significant declines in the Yen lead to increased inflation. Ueda emphasized that the timing of the next policy shift could be influenced by foreign exchange movements.
Furthermore, early Friday reports from US officials informed CBS News about an Israeli missile strike on Iran, resulting in explosions in the central province of Isfahan. However, the exact target of the attack remains unclear. With Iran on high alert following Israel’s retaliation threat, the escalating tensions between the two countries have the potential to amplify demand for safe-haven assets, including the Japanese Yen (JPY), further supporting the currency against the Pound Sterling (GBP).
