GBP/JPY holds gains near 192.00 as traders expect a cautious policy-easing approach by BoE

• GBP/JPY may appreciate as the BoE leans toward a gradual approach to policy easing.
• The Pound Sterling may gain ground as BoE officials support following a gradual policy-easing approach.
• The likelihood of a BoJ's 25 basis point hike in December rose to nearly 60%, against 50% a week ago.

The GBP/JPY pair snaps its five-day losing streak, trading near 191.90 during Asian trading hours on Thursday. Economic data releases remain sparse for the United Kingdom (UK), with a similarly light calendar expected in the coming week.

As a result, the Pound Sterling (GBP) is likely to be influenced by market expectations regarding the Bank of England's (BoE) December interest rate decision. The GBP/JPY cross could find support as BoE officials lean toward a gradual approach to policy easing.

On Monday, during a speech at King's Business School, BoE Deputy Governor Clare Lombardelli stressed the need for clearer signs of easing inflationary pressures before considering further rate cuts.

Deputy Governor Lombardelli also warned of the risks associated with inflation staying above the BoE's target. She highlighted concerns about wage growth stabilizing at 3.5%-4.0% and the Consumer Price Index (CPI) lingering around 3% instead of the 2% target, which could present significant policy challenges.

The upside for the GBP/JPY cross may face headwinds as the Japanese Yen (JPY) finds support amid increasing expectations of another interest rate hike by the Bank of Japan (BoJ) as early as next month. Market sentiment has shifted, with the probability of a 25 basis point hike in December rising to approximately 60%, compared to around 50% just a week ago.

Additionally, BoJ Governor Kazuo Ueda recently hinted at the possibility of tightening monetary policy, highlighting concerns over the Yen's prolonged weakness. Investors are now closely watching Tokyo's inflation data, scheduled for release on Friday, as it could provide crucial clues regarding the BoJ's policy direction.