• GBP/JPY trades in positive territory for the third straight day on Wednesday.
• The UK's inflation dropped to its lowest level in nearly two years, prompting investors to expect a rate cut from the BoE in 2024.
• BoJ’s members were split between those who were cautious about raising rates and others who saw the need for a future exit.

The GBP/JPY cross holds positive ground during the early European session on Wednesday. The cross edges higher following the Bank of Japan's (BoJ) publication of its Summary of the December Meeting. The cross currently trades near 181.63, up 0.21% on the day.

The cooling inflation in the UK economy to its lowest rate in over two years, encouraging investors to raise their bets that the Bank of England (BoE) would cut the interest rates in the first half of next year. The markets are pricing in nearly 50% possibility of a rate cut by March 2024 and fully pricing in a BoE rate cut by May 2024.

About the data, the UK Gross Domestic Product (GDP) for the third quarter (Q3) came in weaker than market expectations, arriving at -0.1% QoQ versus 0% prior, while the annual GDP growth number expanded by 0.3% from the previous reading of 0.6%. Additionally, November’s UK Retail Sales climbed 1.3% MoM from 0% in October.

On the JPY’s front, the BoJ released the Summary of Opinions from the December Monetary Policy meeting on Wednesday. While the board maintained an ultra-loose policy and kept its dovish guidance unchanged, the members were split between those who were cautious about raising rates and others who saw the need to start preparing for a future exit.

The BoJ Governor Kazuo Ueda said on Monday that the possibility of achieving the central bank’s inflation target was "gradually rising, and it would consider exiting policy if prospects of sustainably achieving the 2% target increased sufficiently. Nonetheless, many market participants anticipate the BOJ to end its negative rate policy in 2024, with some expecting a policy shift in January or April.

Moving on, the Japanese Retail Trade for November and Industrial Production will be due on Thursday. On Friday, the UK’s Nationwide Housing Prices will be released. Amidst the holiday season's thin trading, the risk sentiment and the ongoing adjustments in central bank policies are expected to continue influencing the GBP/JPY cross movements