GBP/JPY rises steadily as market mood brightens, reducing flows to the safe-haven Yen. Positive lending data in the UK shows credit remains ample. BRC Shop Price Index shows disinflation in the UK but not enough to prompt BoE into action, say BBH analysts. The sudden one-day decline was put down to the Japanese authorities intervening in Forex markets to prop up the depreciating Japanese Yen .
UK lending data out a few hours later also had little immediate impact on GBP but GBP/JPY did float higher in the hours that followed. It is possible the UK data reflected an environment of fairly ample lending and loose credit conditions which might make it less likely that the Bank of England will rush to cut interest rates. Keeping interest rates higher for longer is favorable for the Pound as it attracts capital inflows.