GBP/JPY remains stable around 187.00 following the mixed UK labor data

• GBP/JPY receives minor support from mixed UK employment figures released on Tuesday.
• ILO UK Unemployment Rate eased to 4.1% in the three months to July, following June’s 4.2% print.
• The Japanese Yen may appreciate as recent economic data continue to bolster expectations of the BoJ increasing rates further.

GBP/JPY maintains its position above 187.00 during the Asian hours on Tuesday. The Pound Sterling (GBP) receives minor support from the mixed employment data from the United Kingdom (UK). ILO Unemployment Rate eased to 4.1% in the three months to July, following June’s 4.2% print, the data published by the Office for National Statistics (ONS).

UK Claimant Count Change showed that the change in the number of unemployed people fell to 23.7K in August, falling short of the market expectations of 95.5K and the previous 102.3K readings. Average Earnings Including Bonus (3Mo/Yr) came in at 4.0% in July, against the expected 4.1% and prior 4.6% readings.

On Monday, the GBP/JPY cross found support as the Japanese Yen (JPY) struggled following weaker-than-expected Gross Domestic Product (GDP) data from Japan. Despite this, strong economic growth, rising wages, and ongoing inflationary pressures continue to bolster expectations that the Bank of Japan (BoJ) may raise interest rates further, which has helped limit the downside for the Yen.

Japan's GDP Annualized expanded by 2.9% in the second quarter, slightly below the preliminary estimate of 3.1% and the market forecast of 3.2%. Nonetheless, this figure represents the strongest yearly growth since Q1 2023. On a quarter-on-quarter basis, GDP grew by 0.7% in Q2, falling short of the market prediction of 0.8%, but still marking the strongest quarterly growth since Q2 2023.

Shigeru Ishiba, the former Japanese defense minister and a candidate in the ruling Liberal Democratic Party's leadership race, stated on Tuesday that achieving a complete exit from deflation is a critical task for Japan, according to Reuters. Ishiba also noted, "I don't think private consumption has recovered strongly yet despite some signs of improvement."