Ella 
GBP/JPY retreated from session highs to 184.60 as catalysts in the UK and Japan were mixed, with GBP/JPY lacking upside momentum after a two-day winning streak. Also threatening GBP/JPY bulls are falling U.S. Treasury yields and a return to cautious sentiment among U.K. traders following Monday’s bank holiday.
Earlier in the day, the annual rate of store price inflation released by the British Retail Consortium (BRC) fell to its lowest level since October 2022, with inflation at 6.9% in August, compared with 7.6% in July.
On the other hand, Japan’s July unemployment rate unexpectedly rose to 2.7%, both expected and the previous value of 2.5%; Japan’s job-seeking ratio fell to 1.29 in July, compared with the expected and previous value of 1.30.
Elsewhere, U.S. 10-year yields fell three basis points (bps) to 4.20%, while two-year yields fell half a percentage point to 5.5%, extending last week’s retreat from multi-month highs. That said, the U.S. 10-year Treasury yield remained under pressure around 4.19% at press time, while S&P 500 futures were unclear at press time.
Also, GBP/JPY traders were stimulated by mixed news from Japan’s June coincident and leading economic indicators. Notably, Bank of Japan Governor Kazuo Ueda defended the current ultra-loose monetary policy by saying that Japan’s inflation rate was slightly below target at a Jackson Hole seminar, which in turn gave the pound another boost. /JPY bulls are hopeful.
Looking ahead, the return of UK markets to trading and the reaction of Bank of England (BOE) Deputy Governor Ben Broadbent to last week’s hawkish tendencies will be important to watch. That said, BoE Governor Broadbent, who mentioned the need for higher interest rates due to wage pressures at the Jackson Hole Symposium, appeared to be hawkish and sterling (GBP) bullish in his outlook for the UK economy challenged.
