GBP/JPY recovers above 158.50 ahead of UK Employment and Japan’s GDP data

• GBP/JPY has rebounded firmly from 158.50 but is still inside the woods.
• Bets look solid for the appointment of academician Kazuo Ueda for BoJ novel leadership.
• An increase in the UK labor cost index will escalate troubles for the BoE.

The GBP/JPY pair sensed the strength and scaled above 158.50 in the early Tokyo session. Despite a recovery move, the cross is still inside the woods as it is expected to display a volatility contraction move after wild swings reported on Friday. Rising odds for the appointment of academic Kazuo Ueda as the successor of Bank of Japan (BoJ) Governor Haruhiko Kuroda triggered immense volatility in the Japanese Yen.

The Nikkei Asian Review reported on Friday that the Japanese Cabinet is set to appoint Kazuo Ueda as the next BoJ Governor after Haruhiko Kuroda steps down in April. The reports also claimed that the Japanese government will nominate ex-FSA Chief Himino, ex-FSA Chief Himino, and BoJ Executive Director Shinichi Uchida for the new Deputy BoJ Governor.

The headlines resulted in a perpendicular upside move in the Japanese Yen, however, the move got fizzled out after Kazuo Ueda stated the current monetary policy as appropriate. Japan’s PM Fumio Kishida has been reiterating that the administration will consider an exit from the decade-long expansionary policy with novel BoJ leadership. And, a contrary monetary policy view from academic Kazuo Ueda faded expectations of exit from accommodative monetary policy.

On the economic data front, investors are keeping an eye on Japan’s Gross Domestic Product (GDP) (Q4) data, which will release on Tuesday. The economic data is seen to expand by 2.0% on an annual basis and 0.5% on a quarterly front.

Meanwhile, investors in the United Kingdom are waiting for Employment numbers to get further guidance about the Pound Sterling. The Unemployment Rate for three months is seen unchanged at 3.7%. While the Average Earnings excluding bonuses are expected to increase to 6.5%. This might create more troubles for the Bank of England (BoE), which is struggling to gain an upper hand in the battle against firmer inflation.

Over the UK inflation guidance, UK FM Jeremy Hunt is of the view that “If we stick to our plan to halve inflation this year, we can be confident of having amongst the best prospects for growth of anywhere in Europe.”