GBP/JPY attempts a break above 167.00 ahead of UK employment data

• GBP/JPY is eyeing a cross above 167.00 on expectations of upbeat UK payroll data.
• The UK headline CPI is expected to remain above 10% consecutively.
• Japan’s Industrial Production is seen steady at -1.8%.

The GBP/JPY pair has moved higher after displaying topsy-turvy moves in a 166.50-166.90 range as the market participants have shifted to the sidelines ahead of the UK employment data. The asset turned sideways followed by a vertical upside move from Friday’s low around 164.30. A sideways move after an upside rally is generally followed by a resumption in the upside journey as those investors who prefer to enter in an established trend will add up significantly.

The crucial trigger which will bring demolish the consolidation will be the UK employment data. The Unemployment Rate is expected to remain unchanged at 3.8%. While the number of individuals claiming jobless benefits will decline by 9.2k. The Average Earnings data will improve significantly by 5% vs. 4.7%, which will support the households to offset the higher payouts led by soaring inflation.

It is worth noting that price pressures in the UK economy are operating above the double-digit figure, which is acting as headwinds for the households. Higher price pressures forced households to scale down their consumption. Also, lower labor cost data was unable to offset the higher payouts. Now, an improvement in Average Hourly Earnings will support them to keep up their consumption pattern.

This week, investors will also focus on the UK Consumer Price Index (CPI) data, which will release on Wednesday. The headline inflation figure is expected to improve to 10.2%, 10 basis points (bps) higher than the prior release. Also, the core CPI is seen higher at 6.3% against the prior release of 6.2%. This will keep the hawkish stance of the Bank of England (BOE) intact.

Meanwhile, the yen bulls are awaiting development on Japan’s intervention in the Fx market to support the yen bulls. The Bank of Japan (BOJ) is highly needed to shift its stance to neutral to fix the depreciating yen. On the data front, the economy will release the Industrial Production data, which is seen as stable at -1.8%.