GBP/JPY find ground near 198.60 on upbeat UK GDP data

• GBP/JPY attracts bids near 198.60 as the UK GDP data for Q2 and June beat estimates.
• In June, month-on-month factory data grew strongly after declining in May.
• US Treasury Secretary Bessent stated that the BoJ would hike interest rates.

The GBP/JPY pair finds a temporary cushion near 198.60 during Thursday's European session after correcting sharply from the psychological level of 200.00 earlier in the day. The pair attracts some bids after the release of the United Kingdom (UK) Gross Domestic Product (GDP) and the factory data.

The Office for National Statistics (ONS) reported that the economy grew at a faster pace of 0.3% in the second quarter of the year, compared to expectations of 0.1%. In the previous quarter, the economy rose by 0.7%. In June, the economy returned to expansion after declining by 0.1% in June. The GDP growth in June came in at 0.4%, stronger than estimates of 0.1%.

Meanwhile, month-on-month Industrial and Manufacturing Production also came in stronger than projected.

Upbeat UK economic data would affirm traders to stick to their expectations that the Bank of England (BoE) will not reduce interest rates in the remainder of the year. Last week, the BoE reduced its key borrowing rates by 25 basis points (bps) with a slim majority and retained its "gradual and careful" monetary expansion guidance.

On Thursday, the Japanese Yen (JPY) outperforms across the board as comments from United States (US) Treasury Secretary Scott Bessent in an interview with Bloomberg TV signaled that the Bank of Japan (BoJ) would raise interest rates further. "They're [the BoJ is] behind the curve. So, they're going to be hiking and they need to get their inflation problem under control," Bessent said.