• GBP/JPY edges lower as the economic growth in Japan raises bets of a further rate hike by the BoJ.
• The risk-sensitive GBP receives support from the improved risk sentiment following US Retail Sales.
• UK Retail Sales are expected to increase by 0.5% and 1.4% for MoM and YoY for July, respectively.

GBP/JPY breaks its four-day winning streak, trading around 191.60 during Friday’s Asian hours. The decline in the GBP/JPY cross can be attributed to the strengthened Japanese Yen (JPY), which has gained support from recent growth in Japan’s second-quarter GDP, increasing the likelihood of a near-term interest rate hike by the Bank of Japan (BoJ).

However, the JPY could experience volatility due to political uncertainty in Japan. Japanese Prime Minister Fumio Kishida announced at a press conference on Wednesday that he will not seek re-election as the leader of the Liberal Democratic Party (LDP) in September.

However, stronger-than-expected recovery in US Retail Sales has eased concerns about a potential US recession and improved risk-on sentiment. The improved risk-on mood could boost the risk-sensitive Pound Sterling (GBP) and limit the downside of the GBP/JPY cross.