GBP/JPY recovers early losses as UK GDP returns to growth

The GBP/JPY pair claws back its early losses and turns slightly positive to near 213.20 during the European trading session on Thursday. The pair attracts bids as the Pound Sterling (GBP) gains, following the release of the United Kingdom (UK) monthly Gross Domestic Product (GDP) data for November.

The Office for National Statistics (ONS) showed that the economy returned to growth after contracting 0.1% in both September and October. The UK GDP growth came in at 0.3%, faster than estimates of 0.1%.

Meanwhile, factory data for November has also come in stronger than expected. Month-on-month (MoM) Manufacturing Production rose at a robust pace of 2.1% against estimates of 0.5% and the October reading of 0.4%. In the same period, Industrial Production rose 1.1%, strongly than expectations of 0.1%, but slower than the prior reading of 1.3%.

Going forward, the major trigger for the Pound Sterling will be the UK employment and Consumer Price Index (CPI) data scheduled for next week. Investors will pay close attention to the data to get fresh cues on the Bank of England’s (BoE) monetary policy outlook.

During the European trading session, the Japanese Yen (JPY) struggles to hold ground regained earlier in the day. The Japanese currency attracted bids amid fears of intervention by Tokyo counter one-way excessive moves. However, the broader outlook of the JPY remains uncertain on expectations of a looser fiscal and monetary policy this year.

Additionally, hopes of the announcement of a snap election by Prime Minister Sanae Takaichi next week are also keeping Yen’s recovery capped. Market experts believe Japan’s budget to unveil big spending plans to boost economic growth.