GBP/JPY treads water near 197.50 following UK Halifax House Prices, Japan's wage data

• GBP/JPY maintains its position after the release of UK Halifax House Prices data.
• The Pound Sterling struggles amid mounting concerns over the United Kingdom's fiscal outlook.
• Japan's Labor Cash Earnings rose by 1% YoY in May, missing market expectations for a 2.4% increase.

GBP/JPY remains steady after experiencing volatility, trading around 197.30 during the European hours on Monday. The currency cross holds ground following the UK Halifax House Prices data, which climbed 2.5% year-over-year in June, against the 2.6% rise in May. The monthly house prices stalled, after an upwardly revised 0.3% decline.

The GBP/JPY cross may struggle as the Pound Sterling (GBP) faces challenges due to rising concerns over the United Kingdom's (UK) fiscal outlook. Chancellor Rachel Reeves indicated at possible tax hikes in the autumn budget to address a public finance gap. Moreover, Labor Party has retreated on welfare reforms to avoid internal rebellion, with Reeves admitting there were costs to those concessions.

Additionally, analysts at Deutsche Bank expect another 25 basis points interest-rate cut to 4% by the Bank of England (BoE) in August. The analysts also anticipated the central bank to deliver two more interest rate cuts in November and December.

The Japanese Yen (JPY) faces challenges as disappointing Japan's wage data weaken expectations for further Bank of Japan (BoJ) rate hikes. Labor Cash Earnings rose 1% year-on-year in May, falling short of market expectations of 2.4% increase and marking a third consecutive month of slowdown. The previous reading was 2.0% (revised from 2.3%) in April.

Additionally, the JPY faced additional pressure following Sunday's comments from Prime Minister Shigeru Ishiba. Ishiba said he would not "easily compromise" in trade negotiations with Washington, as Japan seeks to avoid US tariffs of up to 35% on its exports.