Ella 
GBP/JPY accelerated its decline to a seven-week low of 180.70 in Asia on Friday before surging to 181.80. GBP/JPY rebounded following the Bank of Japan’s (BoJ) interest rate decision after policymakers decided to keep current monetary policy unchanged.
Following the high-profile September monetary policy meeting, Bank of Japan (BoJ) board members decided to keep short-term interest rate targets at -0.1% and 10-year bond yield targets at around 0%, in line with market expectations. However, the divergence in monetary policy between the Bank of Japan and the Bank of England (BOE) has put pressure on the Japanese yen (JPY) and acted as a tailwind for the GBP/JPY cross.
Earlier on Friday, Japan’s national consumer price index (CPI) fell to an annual rate of 3.2% in August from 3.3% in July. Additionally, national inflation excluding fresh food rose to 3.1% in August from 3.0% in July, while national inflation excluding food and energy was 4.3%, compared with 4.3% in the previous month.
The Bank of England (BOE) surprised market participants on Thursday by keeping its benchmark interest rate at 5.25% instead of raising it by 25 basis points (bps) to 5.5% as expected. The Bank of England has decided to pause its long-term path of interest rate hikes as the economy slows and inflation falls, but Governor Andrew Bailey stressed that the central bank does not believe its work is over. He added that he would not predict the Bank of England’s next move but that a rate cut would be “very, very premature”.
Next up, UK retail sales and Purchasing Managers Index (PMI) data will be released on Friday. Retail sales in August are expected to rise to 0.5% m/m from -1.2%, while the composite PMI is expected to rise to 48.7 from 48.6. Traders will look for GBP/JPY cross trading opportunities from this data.
