GBP/JPY nears YTD highs at 199.80 as tariffs, political uncertainty hurt the Yen

• The Pound pares losses against the Yen despite weak UK employment data.
• Political uncertainty in Japan and an extended decline in exports are weighing on the JPY.
• In the UK, Unemployment increased to its highest rate in the last four years.

The Pound has shrugged off the impact of the grim UK employment figures seen earlier today to rally against a weaker Japanese Yen, weighed by the increasing political uncertainty and lack of progress in the trade talks with the US.

The JPY is suffering on Thursday as political uncertainty grows in Japan, following a poll that suggested Prime Minister Ishiba's ruling coalition is likely to lose its majority in parliament after Sunday's election.

The uncertain political scenario adds to investors' anxiety about the lack of advances in the trade negotiations with the US, as the country's exports decline for the second consecutive month. These figures pose a significant challenge for an economy strongly dependent on international trade.

The Japanese Yen's weakness has offset the impact of the downbeat UK employment figures seen earlier today. Data from national Statistics revealed that the Unemployment Rate increased to 4.7% in June, against expectations. Claims for unemployment benefits declined to 25.9K, from last month's 33.1K, but failed to meet the market consensus of a larger decline, to 17.9K.