GBP/JPY corrects from 196.00 as upwardly revised Japan's Q1 GDP supports Yen

• GBP/JPY retraces to near 195.65 as the Japanese Yen (JPY) gains against a majority of its peers.
• According to the revised estimates, the Japanese economy remained flat in the first quarter of the year.
• Investors await the UK employment data for fresh cues on the BoE's monetary policy outlook.

The GBP/JPY pair retraces to near 195.65 during European trading hours on Monday from the intraday high of 196.00. The pair faces slight selling pressure as the Japanese Yen (JPY) gains after the revised Q1 Gross Domestic Product (GDP) data showed that the economy remained flat.

According to the preliminary estimates, the Japanese economy shrank steadily by 0.2%. On an annualized basis, the economy declined at a slower pace of 0.2%, compared to a 0.7% contraction.

Japanese Cabinet Office reported that the GDP growth in the January-March period revised higher on the back of an upward revision in the private consumption data, which accounts for over half of the economy. Households' consumption rose by 0.1%, against a flat performance seen in the flash estimate.

Meanwhile, Japan's Prime Minister Shigeru Ishiba has warned that rising interest rates by the Bank of Japan (BoJ) could weigh on government's spending plans, stating that higher borrowing rates could increase cost of funds. Tokyo's concerns over rising debt cost could force traders to pare bets supporting the BoJ to raise interest rates again this year.

In the United Kingdom (UK) region, investors await the employment data for three months ending April, which will be released on Tuesday. The job market report is expected to show that the ILO Unemployment Rate accelerated to 4.6% from the prior reading of 4.5%. Average Earnings, both Including and Excluding bonuses, grew by 5.5% on year.

Investors will pay close attention to the UK labor market data as it will influence market expectations for the Bank of England's (BoE) monetary policy outlook. The BoE is almost certain to leave interest rates steady at 4.25% in the policy meeting on June 19.