• GBP/JPY holds positive ground near 192.20 after the release of the UK inflation report. 
• UK CPI rose 3.2% YoY in March vs. 3.1% expected. 
• The BoJ’s cautious stance weighs on the Japanese Yen (JPY) against the GBP. 

The GBP/JPY pair snaps the two-day winning streak around 192.20 during the early European session on Wednesday. The Pound Sterling (GBP) edges higher to an intraday high of 192.40 and then retreats following the hotter-than-expected UK Inflation data. 

The headline annual UK Consumer Price Index rose 3.2% in March, softer than a 3.4% increase in February. This reading came in above the market consensus of 3.1%, but still higher than the BoE’s 2.0% target, according to the Office for National Statistics on Wednesday. Furthermore, the core CPI inflation dropped to 4.2% YoY in March from 4.5% in February. Meanwhile, the UK monthly CPI rose 0.6% in March, the same pace seen in February. The GBP gains traction as investors push back market expectations of a September BoE rate cut. 

On the Japanese Yen front, the Bank of Japan (BoJ) has been cautious in normalizing its policy. Japanese CPI inflation is expected to remain above 2% through fiscal year 2024 and decelerate in fiscal year 2025, according to the BoJ’s quarterly outlook report. This triggers the anticipation that interest rates will remain extremely low for some time, which weighs on the Japanese Yen (JPY). Investors will monitor the fresh quarterly growth and price projections due at its April 25–26 policy meeting for any hints about the path of interest rate.