• GBP/JPY pulls back after touching 200-day SMA despite better-than-expected UK data. 
• Analysts still expected the BoE to make rate cuts in 2024. 
• The Yen gains strength from positive GDP data and expectations of more rate hikes from BoJ. 

GBP/JPY pauses in its recovery rally after touching the 200-day Simple Moving Average (SMA) and pulls back almost half a percent on Friday to trade in the 190.60s, despite the release of broadly positive data out of the UK. 

The data failed to impact UK 10-year Gilts, however, which remained at 3.9% and revealed bond traders have not altered their inflation expectations after the releases. This, in turn, suggests they see little change in current expectations for UK monetary policy, a major driver of Pound Sterling.   

Data out on Friday showed UK Retail Sales rose by 0.5% in July reversing a 0.9% decline in June. UK GDP was flat in June compared to May, and showed 0.6% growth in Q2 compared Q1, as forecast, when the economy grew 0.7%. Industrial and Manufacturing Production, meanwhile, both easily beat expectations month-over-month in June but continued to show declines on a year-over-year basis. Despite the data being overall positive the Pound weakened versus the Japanese Yen (JPY).