GBP/JPY holds gains around 199.00 following UK employment data

• GBP/JPY remains stronger after mixed UK labor figures were released on Thursday.
• The UK Unemployment Rate rose to 4.7%, while the Employment rate increased by 134,000 in the three months to May.
• Japan’s Merchandise Trade Balance Total showed a surplus of JPY 153.1 billion in June, against expected JPY 353.9 billion surplus.

GBP/JPY retraces its recent losses registered in the previous session, trading around 199.00 during the early European hours on Thursday. The currency cross remains stronger despite mixed employment figures from the United Kingdom (UK).

The UK ILO Unemployment climbed to 4.7% in the three months to May, against the market expectations of remaining unchanged at 4.6%. Meanwhile, the Employment Change came in at 134K, against the 89K in April. Claimant Count Change showed that the number of people claiming jobless benefits increased 25.9K in June, compared with a revised increase of 15.3K in May, above the expected 17.9K figure.

The GBP/JPY cross also draws support as the Japanese Yen (JPY) struggles following disappointing trade figures that fueled concerns about a potential technical recession. Meanwhile, investors are watching for potential fiscal stimulus ahead of the July 20 Upper House election, amid speculation about increased government spending and a possible consumption tax cut to support economic growth.

Japan’s Merchandise Trade Balance Total reported a trade surplus of JPY 153.1 billion in June, following a JPY 638.6 billion deficit in May and well below market expectations of a JPY 353.9 billion surplus. Exports declined 0.5% year-over-year, against the previous decline of 1.7%. The reading missed forecasts of a 0.5% gain, marking a second straight monthly decline. Meanwhile, imports rose 0.2%, recovering from the previous decline of 7.7% and better than the expected 1.6% decline.