Pound Rises vs Yen as Inflation Data Weighs on JPY

Key Moments

GBP/JPY traded just above the mid-213.00s, hovering near the nearly two-week high reached on Thursday.
Japan’s National core CPI slowed to 1.4% YoY in April from 1.8%, staying below the BoJ target for a third consecutive month.
UK Retail Sales fell 1.3% in April, yet expectations for at least one BoE rate hike in 2026 remained in place.

GBP/JPY Holds Near Recent Highs

The GBP/JPY pair attracted buying on dips on Friday and maintained modest intraday gains during the first half of the European session. The cross was trading slightly above the mid-213.00s, keeping it close to the nearly two-week peak set on Thursday and positioning it for solid weekly gains, supported primarily by broad-based weakness in the Japanese Yen (JPY).

Soft Japanese Inflation and Geopolitical Risks Pressure JPY

The JPY remained under pressure against the backdrop of economic risks tied to the conflict in the Middle East and potential disruptions to energy flows through the Strait of Hormuz. Additional downward pressure came from Japan’s latest inflation data released earlier in the day.

The National core Consumer Price Index (CPI) – which excludes fresh food – slowed to a 1.4% year-on-year rate in April, down from 1.8% in the previous month. This was the lowest reading since March 2022 and stayed below the Bank of Japan’s target for the third consecutive month, undermining support for the currency.

Pound Resilient Despite Weak UK Data and Political Uncertainty

In contrast, the British Pound (GBP) appeared largely unmoved by disappointing UK macroeconomic figures, uncertainty around the Bank of England’s (BoE) policy trajectory, and ongoing domestic political concerns.

Data from the UK Office for National Statistics (ONS) showed Retail Sales declined 1.3% in April, following a revised 0.6% drop in March and worse than expectations for a 0.6% fall. This followed softer UK consumer inflation readings and an unexpected increase in the UK Unemployment Rate. Despite this series of weaker indicators, the data did little to dampen market expectations for future BoE tightening.

BoE Outlook and Political Backdrop

Market participants continued to factor in the likelihood of at least one interest rate increase by the BoE in 2026. At the same time, BoE Governor Andrew Bailey stated on Wednesday that a rise in market rates since the start of the Iran war has given the central bank more time to evaluate the economic implications of the conflict.

GBP bulls nonetheless showed some caution amid significant leadership challenges facing UK Prime Minister Keir Starmer. Alongside this, speculation that Japanese authorities could intervene to bolster the JPY remained a potential limiting factor for further gains in GBP/JPY.

JPY Performance Against Major Currencies This Week

The following table summarizes the percentage change of the Japanese Yen against major currencies this week. According to the data, the Japanese Yen showed the strongest performance versus the Canadian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.09%	-0.81%	0.22%	0.25%	0.19%	-0.32%	-0.11%
EUR	-0.09%		-0.92%	0.18%	0.14%	0.09%	-0.35%	-0.22%
GBP	0.81%	0.92%		1.05%	1.07%	1.02%	0.57%	0.67%
JPY	-0.22%	-0.18%	-1.05%		-0.01%	-0.09%	-0.59%	-0.36%
CAD	-0.25%	-0.14%	-1.07%	0.01%		-0.08%	-0.58%	-0.40%
AUD	-0.19%	-0.09%	-1.02%	0.09%	0.08%		-0.44%	-0.23%
NZD	0.32%	0.35%	-0.57%	0.59%	0.58%	0.44%		0.10%
CHF	0.11%	0.22%	-0.67%	0.36%	0.40%	0.23%	-0.10%

The heat map indicates the percentage moves of major currencies relative to each other. The base currency is taken from the left-hand column, while the quote currency is selected from the top row. For instance, choosing the Japanese Yen as the base currency from the left column and moving to the US Dollar column shows the percentage change for JPY (base)/USD (quote).