GBP/JPY heads for 1st weekly gain in four after UK, Japan data sets

The GBP/JPY currency pair was mostly firmer on Friday and on course for its first gain in four weeks, after the latest UK data revealed the strongest monthly growth in retail trade since January.

Retail sales in the UK rose 1.3% month-over-month in November after zero growth in October and well above market consensus of a 0.4% gain.

The result was driven mostly by higher sales at non-food stores, 2.3%, as retailers attributed this performance to the earlier Black Friday sales and broader discounting efforts.

In addition, food store sales went up 0.8% month-over-month in November, while automotive fuel sales grew 0.6%.

In annual terms, retail sales registered a 0.1% uptick in November after a revised down 2.5% drop in October.

However, in other data, UK economy was reported to have contracted at a quarterly rate of 0.1% in Q3, compared with a preliminary estimate of zero growth.

The nation’s services sector shrank 0.2% quarter-on-quarter, compared with a 0.1% decrease in the preliminary estimate, driven by a 1.4% slump in information and communications.

Second-quarter GDP figures were revised lower to indicate no growth instead of a preliminary estimate of a 0.2% expansion.

Meanwhile, the Japanese Yen demonstrated a rather muted reaction to the latest CPI inflation report.

Annual core consumer price inflation in Japan, which excludes fresh food but includes fuel prices, was reported at 2.5% in November, in line with market expectations, while decelerating from 2.9% in October. It has been the lowest core inflation rate since July 2022.

The data took some pressure off the Bank of Japan to phase out its huge monetary stimulus. The BoJ left its ultra-accommodative policy settings intact this week and provided few hints on when it could abandon negative interest rates.

As of 8:00 GMT on Friday GBP/JPY was edging up 0.14% to trade at 180.495. The minor Forex pair was on track for a 0.23% weekly advance.