GBP/JPY struggles around 166.50, upside remains favored ahead of UK Inflation

• GBP/JPY is facing barricades around 166.50 as the focus shifts to UK inflation data.
• The asset didn’t respond well to the mixed UK employment data.
• The Japanese administration is worried over the sheer depreciation of yen.

The GBP/JPY pair is facing feeble hurdles around 166.50 in the early Tokyo session. The asset has attempted a rebound after picking bids around the critical support of 166.00. The pair didn’t display a decent response to the release of the UK employment data on Tuesday.

The UK Office for National Statistics reported an increment in the number of jobless benefits claims by 6.3k against the expectations of a decline by 9.2k. While the Unemployment Rate scaled down to 3.6% in relation to the forecasts and the prior release of 3.8%.The catalyst which delighted the households and the Bank of England (BOE) policymakers is upbeat Average Hourly Earnings data.

The UK labor cost index has improved dramatically to 5.2% vs. the estimates of 5% and the prior release of 4.7%. Earlier, households were facing the headwinds of declining paychecks due to subdued wage-rate hikes. Therefore, inflation-adjusted payouts were not getting offset by lower paychecks. Now, an increase in earnings will strengthen them to pay energy and food bills effectively.

In today’s session, the UK Consumer Price Index (CPI) data will be of utmost importance. The economic data is seen higher at 10.2% vs. 10.1% reported earlier on an annual basis. Also, the core CPI is seen higher at 6.3% vs. 6.2% for June. The deadly duo of soaring jobless benefits claimed and price pressures will create more troubles in an already laborious job of BOE policymakers.

Meanwhile, yen bulls are focusing on the Industrial Production data, which is seen steady at -1.8% on an annual basis. The Japanese administration is worried over the sheer depreciation of yen. Japanese Deputy Chief Cabinet Secretary Seiji Kihara urges the country’s government to take necessary steps to counter excessive declines in the yen.