GBP/JPY surpasses 165.00 despite slippage in BOE hawkish bets

• GBP/JPY has refreshed its two-day high at 165.15 amid broader weakness in yen.
• The BOJ is committed to an ultra-dovish policy and unlimited JGBs buying to spurt the growth rate.
• A moderate hawkish commentary is expected from the BOE to avoid recession in the UK.

The GBP/JPY pair has displayed a stellar performance in the Asian session. The cross is advancing promptly without any significant corrective moves and has registered an intraday high of 165.00. The pair has picked bids amid broader weakness in the Japanese yen.

The Bank of Japan (BOJ) is dedicated to bringing the pre-pandemic growth levels in its fragile economy and is focusing on keeping the inflation rate above 2%. However, the Japanese yen is falling like a house of cards for a prolonged period led by the ultra-loose interest rates by the BOJ and unlimited buying of Japan Government Bonds (JGB) to keep yields lower. BOJ Governor Haruhiko Kuroda is continuously emphasizing the demand for wage rate hikes to keep the inflation rate above the desired levels.

Meanwhile, the households in the UK economy are facing the headwinds of lower Average Hourly Earnings and a higher inflation rate. In times, when individuals need higher paychecks to cooperate with the higher price pressures, lower earnings have dampened their sentiment.

Apart from that, lower Retail Sales data will keep the pound bulls on the tenterhooks. The economic data landed at -5.8%, lower than the expectations of -5.3% and the prior release of -4.7% on an annual basis. Investors should be aware of the fact that higher price pressures are driving Retail Sales for now. And, a release of lower Retail Sales indicates that the overall demand is extremely weak. A slippage in the overall demand and lower earnings may restrict the Bank of England (BOE) to go all in and pass a bumper rate hike this time.