GBP/JPY holds positive ground near 194.50 after UK inflation data

• GBP/JPY remains firm around 194.50 in Wednesday's early European session.
• UK CPI inflation eased to 2.8% YoY in February vs. 2.9% expected.
• The rising bets of further BoJ rate might underpin the JPY. 

The GBP/JPY cross trades in positive territory near 194.50 during the early European trading hours on Wednesday. However, the Pound Sterling (GBP) pares gains against the Japanese Yen (JPY) after the cooler-than-expected UK Consumer Price Index (CPI) inflation data for February. Later on Wednesday, traders will keep an eye on the UK's Budget Report. 

Data released by the United Kingdom's Office for National Statistics on Wednesday showed that the country's headline CPI rose 2.8% YoY in February, compared to 3.0% in January. This reading came in softer than the 2.9% expected. The Core CPI, which excludes the volatile prices of food and energy, climbed 3.5% YoY in February versus 3.7% prior, below the market consensus of 3.6%. 

Meanwhile, the monthly UK CPI inflation rebounded to 0.4% in February from -0.1% in January. Markets expected a 0.5% print. The Pound Sterling faces mild downward pressure in an immediate reaction to the softer UK CPI inflation data.

On the JPY's front, the Bank of Japan (BoJ) Governor Kazuo Ueda said early Wednesday that the Japanese central bank will continue to raise interest rates if economic and price developments move in line with its forecasts. Furthermore, significant wage hikes for the third consecutive year keep alive expectations of further interest rate hikes by the BoJ. This, in turn, might boost the JPY and create a headwind for the GBP/JPY cross.