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In early Asian trading, the GBP/JPY pair is exhibiting erratic behavior near the key level of 159.00. After a decline from Wednesday's high above 161.50, the cross has shifted into a rangebound state. Despite Governor Haruhiko Kuroda's dovish comments, the asset experienced a sharp decline as GBP/JPY surrendered the Bank of Japan's (BoJ) unaltered policy-driven gains.

After maintaining the interest rate at -0.10% and the 10-year Japanese Government Bonds (JGBs) around 0%, BoJ Kuroda stated that there is "no need to further extend bond target band," causing GBP/JPY to lose ground. He went on to say that Japan's economy is still on the road to recovery from the epidemic, and that the Bank of Japan aims to attain its inflation objective of 2% in line with wage growth.

Analysts at MUFG assert that the Yen sell-off should prove brief and retain a bullish outlook for the JPY in the next year on the grounds that the impending end of Governor Kuroda's term at the end of April will continue to fuel rumors of a policy shift under new leadership. They stated, "We anticipate market participants to maintain skepticism regarding the sustainability of YCC policy settings."

Friday's release of the National Consumer Price Index (CPI) will provide additional advice for the Japanese Yen. According to the consensus, the annual headline CPI (Dec) is projected to increase to 4.4% from 3.8% previously. The core inflation rate, which includes oil and food costs, is expected to increase to 2.9% from 2.8% previously reported.

The Bank of England (BoE) will not be pleased by the United Kingdom's headline inflation decelerating to 10.5% from 10.6% as the current CPI is exceptionally far from the median rate. The market anticipates that Governor of the Bank of England Andrew Bailey may raise interest rates somewhat more than anticipated.

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