• GBP/JPY eyes stabilization above 191.00 as hopes for BoJ’s pivot to exit a dovish stance wane.
• Japan’s National CPI data will influence market expectations for BoJ’s interest rates.
• UK’s high wage growth is offsetting downside pressures on inflation BoE’s higher interest rates.

The GBP/JPY pair oscillates near a historic high of 191.00 in the London session on Monday. The pair aims to extend more upside as uncertainty over the Bank of Japan’s (BoJ) plans of exiting the decade-long dovish monetary policy stance is waning.

The Japanese economy remains in a technical recession in the second half of 2023, which is an unfavorable condition for the BoJ to consider a shift to a restrictive stance. The economy needs heavy monetary stimulus to achieve an uptick in the coming quarters.

Meanwhile, investors await the National Consumer Price Index (CPI) data for January, which will be published on Tuesday. Investors anticipate that annual CPI excluding fresh foods would fall below 1.8% from 2.3% in December. This would indicate that the BoJ is struggling to maintain the underlying inflation above the 2% target. Eventually, this will undermine the plans of exiting the expansionary policy stance.

On the United Kingdom front, higher wage growth and service inflation continue to be painful for the economy. The wage growth in the UK economy is increasing at a pace double what is required to be consistent with bringing down inflation to the 2% target. This is forcing the Bank of England (BoE) to delay rate cuts aggressively as it could flare up price pressures again

Meanwhile, investors await fresh guidance from BoE policymakers on the timing of rate cuts.

On the economic data front, UK’s recruitment data company Adzuna showed that job postings by British employers hit significantly in January. "January 2024 has proven to be one of the most difficult starts to the year for job hunters in recent years with companies continuing to put hiring plans on ice," Adzuna co-founder Andrew Hunter said.