GBP/JPY is higher for a second day in a row, trading around 188.70 during the Asian session on Tuesday. The pound was supported by hawkish comments from Bank of England (BOE) policymaker Catherine Mann on Monday.
In a podcast with the Financial Times (FT), Bank of England policymaker Mann raised concerns about wage growth in the UK as a major inflationary issue. She noted that services sector inflation continues to exceed 5% annually, making it challenging to achieve the 2% headline inflation target.
Traders are currently awaiting UK monthly employment data due on Tuesday, with the number of people applying for unemployment benefits expected to fall to 14,500 in July from the previous reading of 32,300. Additionally, UK consumer inflation data is expected to be mixed on Wednesday.
The upside for risk-sensitive currencies such as the pound may be capped as geopolitical tensions intensify in the Middle East. Safe-haven inflows may have provided support to the Japanese yen (JPY), limiting GBP/JPY upside.
Israeli forces continued operations near the southern Gaza city of Khan Younis on Monday. CBC News quoted Palestinian medics as saying that an attack by Israeli forces on Khan Younis on Monday killed at least 18 people.
The Japanese Diet is scheduled to hold a special meeting on August 23 to discuss the Bank of Japan’s (BoJ) decision to raise interest rates last month. Reuters quoted government sources as saying that the meeting organized by the House of Commons Financial Affairs Committee is expected to invite Bank of Japan Governor Kazuo Ueda to attend.