GBP/JPY juggles below 163.50 as focus shifts to UK data

• GBP/JPY is oscillating in a range of 163.03-163.54 as investors await UK economic data.
• BOJ’S ultra-dovish commentary may weaken the yen bulls further.
• The BOE could bring the inflation rate to the targeted rate of 2% in two years.

The GBP/JPY pair is displaying a balanced auction profile in a narrow range of 163.03-163.54 from Monday.  On a broader note, the cross is going through a time correction phase after hitting a high of 164.47 on Monday. Therefore the upside remains favored, which will be backed by the continuation of an ultra-loose monetary policy by the Bank of Japan (BOJ).

The extreme dovish commentary from BOJ Governor Haruhiko Kuroda on Monday has weakened the yen bulls on a broader note. The investing community is aware of the fact that the Japanese yen is in bearish territory for a tad longer period. Pity to the efforts by the BOJ on accelerating the inflation rate and failing on the same.

The plain vanilla inflation rate in Japan has crossed the inflation target of 2%. However, the major trigger behind reaching the inflation target is soaring energy bills and food prices. Therefore, BOJ Kuroda is bent on the deployment of additional monetary easing measures.

On the UK front, soaring price pressures have resulted in a very large real income shock for the households. Bank of England (BOE) Governor Andrew Bailey sees an inflation rate near targeted levels in two years. Also, the escalating real income shock will also lower the price pressures as the households are expected to drop their demand volumes itself significantly to equalize the shopping list with the paychecks.

This week, the release of the UK data will be of utmost importance. The Gross Domestic Product (GDP) is seen at 0% vs. -0.3% printed earlier. While the annual Manufacturing Production may slip to 0.3% from the former release of 0.5%.