GBP/JPY Is Anchored at 189.00 but Is Trending Higher

Wednesday saw a slender rally in the GBP/JPY pair, which tested 189.50 before concluding trading near the 189.00 handle. After dipping into the 188.00 handle early in the week, the pair is recovering with caution.

A continuation of the Bank of Japan's (BoJ) hints at the potential termination of the negative interest rate regime. Early Wednesday morning, BoJ Governor Kazuo Ueda alluded to "tweaking negative rates" as the BoJ prepared to place the final decision-making burden on spring wage negotiations between unions and management at large business organizations. In the immediate future, the hawkishness or dovishness of the Japanese central bank will be wholly determined by wage growth subsequent to the conclusion and accumulation of data from Japan's spring negotiations, the BoJ has expressly stated.

Early on Wednesday, conflicting data from the United Kingdom did little to move the needle. Following December's 0.6% reading, UK industrial production decreased to -0.2% in January, falling short of the anticipated unchanged print of 0.0%. In accordance with expectations, UK MoM Manufacturing Production decreased by 0.0%, as opposed to the previous 0.8%. In January, the Gross Domestic Product (GDP) of the United Kingdom (UK) printed at 0.2%, surpassing the previous estimate of -0.1%.

For the remainder of the trading week, both the Pound Sterling (GBP) and the Japanese Yen (JPY) receive scant information. The Guppy's economic calendar will conclude on Friday with mid-tier UK consumer inflation expectations for the following 12 months. Most recent UK consumer inflation projections stood at 3.3%.