GBP/JPY trims a part of intraday gains after UK jobs data, still well bid around 188.70 area

• GBP/JPY gains strong positive traction on Tuesday in reaction to dovish BoJ comments.
• The mixed UK jobs report prompts some GBP selling and caps the upside for the cross.
• The fundamental backdrop warrants caution before placing aggressive bearish bets.

The GBP/JPY cross stages a goodish recovery from sub-188.00 levels on Tuesday and for now, seems to have snapped a five-day losing streak to a nearly one-month low touched the previous day. Spot prices, however, retreat a few pips from the daily peak in reaction to mixed UK monthly jobs report and currently trade around the 188.75 region.

The UK Office for National Statistics (ONS) reported that the number of people claiming unemployment-related benefits rose to 16.8K in February as compared to the previous month's downwardly revised reading of 3.1K and the 20.3K expected. The better-than-anticipated headline number, however, was offset by an uptick in the unemployment rate to 3.9% during the three months to January and a slight moderation in the UK wage growth data. This, in turn, prompts some selling around the British Pound (GBP) and the GBP/JPY cross.

Market participants, however, seem convinced that the Bank of England (BoE) to keep interest rates higher for longer despite a sluggish economy. This, in turn, might hold back the GBP bears from placing aggressive bets. Meanwhile, the Bank of Japan (BoJ) Governor Kazuo Ueda fell short of providing any hints about exiting negative rates or scrapping the Yield Curve Control (YCC) policy. This, along with a generally positive risk tone, is seen weighing heavily on the Japanese Yen (JPY) and should contribute to limiting the downside for the GBP/JPY cross.