Sterling Regains Its Footing Against the Yen as a Wall of UK Data Looms

After sliding for two straight days, the British Pound has clawed back ground against the Japanese Yen, with traders now bracing for a week stacked with major UK economic releases.

The British Pound has found its feet again against the Japanese Yen after two sessions of losses. But the recovery is arriving at a nervous moment, not a quiet one. A run of heavyweight UK economic releases is due over the coming days, and that is exactly why currency traders are already steeling themselves for sharp swings in Sterling.

The jobs and inflation figures landing this week are expected to weigh heavily on how markets read the Bank of England's monetary policy decision next week. In short, the Pound's direction is likely to hinge on these numbers.

Jobs Data Due Tuesday
On Tuesday, releases from the Office for National Statistics are expected to show the ILO Unemployment Rate holding steady at 4.9%. Average Earnings Excluding Bonuses, a closely watched gauge of wage growth, is forecast to have risen at a steady 3.4% Year-on-Year. The trajectory of pay matters because it signals how much underlying inflationary pressure is still building in the economy.

Attention will also fall on the UK core CPI, which strips out the volatile components of food, energy, alcohol and tobacco and is therefore treated as a cleaner read on price trends. It is estimated to have climbed at a modest pace of 2.5%, down from the previous reading of 2.6%.

How Inflation Moves the Pound
The Bank of England's central job is to keep inflation, as measured by the headline Consumer Price Index, running at around 2%, which is what gives each monthly print its weight. When inflation accelerates, it points to interest rates rising faster and sooner, or to the central bank scaling back bond purchases, both of which tighten the supply of Pounds. When price rises cool, the opposite applies and looser policy comes into view. That is why a hotter-than-expected inflation figure tends to lift Sterling.

In live trade, the Pound is hovering near the 1.34 mark against the US Dollar, essentially flat versus its prior close. On the charts, the 14-day RSI sits at 55, a balanced reading that leans neither overbought nor oversold.

What to Expect From the BoJ
On the other side of the pair, the Bank of Japan is widely expected to leave interest rates unchanged at its policy meeting next week. That expectation of a hold will also feed into how the Pound trades against the Yen.

Ethereum Leads the Crypto Pack
Away from currencies, Ethereum has shown greater relative strength than its rivals in the crypto market over the past week. Between last week and Wednesday, ETH posted double-digit gains and outpaced fellow majors Bitcoin, XRP and Solana. The broader market then began to correct from Thursday, a reminder that Ethereum's advance, however impressive on the surface, still looks fragile underneath.

Cardano's Hard Fork
Cardano (ADA), meanwhile, has stalled at $0.165 following a modest bounce the previous week. The Van Rossem hard fork went live on Saturday, marking Cardano's first protocol upgrade to be approved entirely through onchain governance. It brought in Protocol Version 11, an update aimed at lowering smart contract costs.

June Inflation Drops Sharply
On the price front, June CPI fell 0.4% on the month, the largest single-month decline since April 2020. That drop pulled the annual rate down to 3.5% from May's 4.2% and snapped a three-month streak of acceleration. Core prices went nowhere over the month, staying flat, and eased to 2.6% Year-on-Year. Both figures came in below consensus, adding to the signs that inflation is losing steam.

What this means for you
• For investors: Sterling could see sharp swings this week, so it makes sense to size currency positions carefully until the UK jobs and inflation numbers are out.
• For crypto holders: Ethereum's rally looks strong on the surface but fragile underneath, and the market has been correcting since Thursday, so stay cautious on gains.

Questions & Answers

1. Why did the British Pound rise against the Japanese Yen?
The Pound rebounded after two straight days of losses, right as a week packed with major UK economic data was getting under way.

2. What data is due on Tuesday?
Tuesday's UK releases are expected to show the ILO Unemployment Rate steady at 4.9% and Average Earnings Excluding Bonuses up 3.4% Year-on-Year.

3. What is the forecast for UK core CPI?
Core CPI is estimated to have risen modestly to 2.5%, down from the previous reading of 2.6%.

4. What is expected from the Bank of Japan?
The Bank of Japan is expected to leave interest rates unchanged at its policy meeting next week.

5. How did Ethereum perform in the crypto market?
Between last week and Wednesday, ETH posted double-digit gains and outperformed Bitcoin, XRP and Solana, before the market started correcting on Thursday.

6. What is Cardano's Van Rossem hard fork?
Activated on Saturday, it is Cardano's first protocol upgrade approved entirely through onchain governance, bringing in Protocol Version 11 to reduce smart contract costs.

7. How much did June inflation fall?
June CPI dropped 0.4% on the month, the largest monthly decline since April 2020, pulling the annual rate down to 3.5% from May's 4.2%.

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