GBP/JPY tumbles to near 202.00 on slower-than-expected UK inflation growth

• GBP/JPY slides swiftly to near 202.00 as soft UK inflation data batters the Pound Sterling.
• UK's core CPI rose moderately by 3.5%, while the headline inflation grew steadily at 3.8% pace.
• Japan's newly elected PM Sanae Takaichi is expected to push big budget reforms.

The GBP/JPY pair is down 0.5% to near 202.00 during the European trading session on Wednesday. The pair has faced intense selling pressure as the Pound Sterling (GBP) underperforms its peers, following the release of the surprisingly softer United Kingdom (UK) Consumer Price Index (CPI) data for September.

The Office for National Statistics (ONS) has reported that the core inflation, which excludes volatile items, rose at a moderate pace of 3.5% on an annualized basis, slower than estimates of 3.7% and the prior reading of 3.6%. In the same period, the headline CPI grew steadily by 3.8%, softer than expectations of 4.0%. On month, the headline inflation remained flat after growing 0.3% in August.

Signs of growth in inflationary pressures peaking are expected to prompt traders to raise bets supporting more interest rate cuts by the Bank of England (BoE) in the remaining year. In the September policy meeting, the BoE stated that price pressures would peak around 4% this month.

This week, investors will also focus on the UK Retail Sales data for September, which will be published on Friday. The Retail Sales data would also influence market expectations for the BoE's monetary policy outlook.

Meanwhile, the outlook of the Japanese Yen (JPY) has become uncertain as Japan's newly elected Sanae Takaichi Prime Minister (PM) after its Liberal Democratic Party (LDP) and Innovation Party formed a coalition government is expected to follow economic policies drawn by former PM Shinzo Abe. Market experts believe that Takaichi will favor big spending plans to boost the economy.