GBP/JPY holds positive ground below the 183.00 mark ahead of UK GDP data

• GBP/JPY extends it upside below the 183.00 area on Thursday ahead of the UK top-tier data.
• The softer Gross Domestic Product (GDP) data could refrain the Bank of England (BoE) from aggressively tightening policy.
• The Bank of Japan (BoJ) is likely to maintain ultra-low interest rates.
• The UK preliminary Q2 GDP will be a crucial event to watch.

The GBP/JPY cross trades in positive territory for four consecutive days. The cross currently trades around 182.90 during the Asian session on Thursday. Investors await the top-tier economic data from the UK for fresh impetus.

In its August policy meeting, the Bank of England (BoE) raised interest rates by 25 basis points (bps) to a 15-year high of 5.25% from 5%. Last week, BoE chief economist Huw Pill stated that interest rates would remain high for a longer period. However, the central bank will respond as the economy and data evolve.

Markets anticipated that the BoE would likely hike two additional rates by the end of the year as inflation remains high. Investors will take cues from the UK Gross Domestic Product (GDP) on Thursday. The annual growth rate is expected to remain at 0.2%. The softer growth number could refrain the Bank of England (BoE) from aggressively tightening policy. This, in turn, might cap the upside in the Pound Sterling.

On the Japanese Yen front, the latest data from the Bank of Japan (BoJ) showed that the Producer Price Index (PPI) for July fell to 3.6% from 4.1% prior and above the expectation of 3.5%. On a monthly basis, the figure increased to 0.1% MoM from -0.2% in the previous month, and worse than expected of -0.2%.

Apart from the data, policymakers stated in the Summary of Opinions of the BoJ that the central bank supports maintaining ultra-low interest rates until robust domestic demand and higher wages replace cost-push factors as the primary drivers of price increases. That said, the monetary policy divergences between the easy-money policy by the BoJ and the tightening by the BoE lead to the weakening of the Japanese Yen (JPY) against the Pound Sterling (GBP).

Looking ahead, the UK preliminary Q2 Gross Domestic Product (GDP) will be released later in the day. The UK Industrial Production and Manufacturing production data will be due on Friday. In the absence of top-tier economic data releases from Japan later this week, the GBP price dynamic will be the main driver for the GBP/JPY cross.