Ella 
GBP/JPY dipped to around 185.60 amid positive Japanese retail data.
Sterling (GBP) may rise as the Bank of England backs a hawkish stance.
Investors turned cautious as the Bank of Japan was expected to maintain its dovish stance.
During Thursday’s Asian session, GBP/JPY retreated from previous gains and is currently trading around 185.60. GBP/JPY is under downward pressure amid positive economic data from Japan. In other words, sales of large retailers increased to 6.0% in July from the previous value of 4.1%. Retail sales rose to a 6.8% annual rate in July from 5.6% previously, compared with expectations for a 5.4% increase.
However, GBP/JPY gained momentum this week as Bank of England (BOE) Deputy Governor Ben Broadbent’s hawkish stance gained support. Broadbent stressed at the Jackson Hole symposium that higher rates are necessary because of wage pressures.
On the other hand, the Bank of Japan is expected to maintain its ultra-loose monetary policy regime. This stance may prevent bears from placing aggressive bets on GBP/JPY. Separately, Bank of Japan Governor Kazuo Ueda said last week that Japan’s underlying inflation rate is slightly below the 2% target. That suggests the central bank may remain dovish until next summer.
U.S. Treasury yields continued to fall, causing the dollar to weaken. Therefore, this trend is supporting the Japanese Yen (JPY), which may put pressure on the GBP/JPY pair. The 10-year U.S. Treasury yield hit a low of 4.08% in the previous session and is currently at 4.11%.
