• GBP/JPY makes gains after a run of positive data out of the UK, including strong PMIs.
• Upside is limited by the strength of the Yen after comments from BoJ governor Ueda. 
• Japanese inflation data raises concerns inflation could be easing making it more difficult for BoJ to normalize policy.

GBP/JPY is exchanging hands in the 191.60s on Friday, marginally up on the day – its third day of gains in a row so far. The pair benefits from a stronger Pound Sterling (GBP) which has risen after the release of survey data pointed to a pick up in business activity in August. 

According to a survey gauging purchasing managers in major sectors – the preliminary UK S&P Global/CIPS Composite Purchasing Manager Index (PMI) – responses were positive, clocking a rise to 53.4 in August from 52.8 in July, and beating economists’ expectations of 52.9, data showed on Thursday.  

The S&P Global/CIPS Manufacturing PMI rose to 52.5 from 52.1, beating expectations it would remain unchanged. The UK Services PMI increased to 53.3 from 52.5 when a rise to 52.8 had been estimated. 

The data gave GBP a lift in all its pairs and compared favorably to the more mixed picture in other major economies. 

It built on the recent positive UK Retail Sales data which showed a return to growth in sales in July after a decline in June. 

Not all the data out of the UK has been positive of late: government borrowing was higher than estimated in July, although how this impacts the financial markets depends partly on the government’s response over time. Consumer Confidence missed estimates in August and Factory Orders came out mixed.