GBP/JPY weakens to near 197.00 as BoJ holds rates steady

• GBP/JPY loses ground to near 197.10 in Thursday's Asian session.
• The BoJ left policy settings unchanged at its July meeting on Thursday.
• Cooling UK labor market paves the way for more interest rate cuts by the BoE.

The GBP/JPY cross faces some selling pressure to around 197.10 during the Asian trading hours on Thursday. The Japanese Yen (JPY) strengthens against the Pound Sterling (GBP) after the Bank of Japan (BoJ) interest rate decision. Investors will closely monitor the BoJ Press Conference later on Thursday. 

The BoJ decided to keep the short-term interest rate target unchanged in the range of 0.40%-0.50% at its July meeting on Thursday. The decision aligned with the market expectations. The JPY attracts some sellers in an immediate reaction to the rate decision. The Japanese central bank extended the pause in its rate-hiking cycle into the fourth consecutive policy meeting in a row after delivering a 25 basis points (bps) hike in January.

According to BoJ's quarterly Outlook Report, uncertainty over trade policy and its developments, impact on economic and price outlook remains high, and underlying inflation is likely to stall due to slowing growth but gradually accelerate thereafter

On the other hand, rising expectations that the Bank of England  (BoE) will cut interest rates in next week's monetary policy meeting continue to drag the GBP lower. Traders have become increasingly confident that the UK central bank will reduce its key borrowing rates on August 7, as UK labor market conditions have cooled down, following an increase in employers' contributions to social security schemes.