• GBP/JPY continues to lose ground as risk aversion heightens due to the Middle East tension.
• Japan’s Unemployment Rate contracted to 2.4% in December from 2.5% prior.
• Biden administration is expected to go for military actions in retaliation to the recent drone attack.
• BoE is expected to maintain its current interest rate of 5.25% in its February meeting.

GBP/JPY extends its losses for the second session on Tuesday, edging lower to near 187.40 during the Asian session. The GBP/JPY cross faces a challenge of risk-off sentiment due to the escalated situation in the Middle East, which drives the investors toward the safe-haven Japanese Yen (JPY), which in turn, acts as a headwind for the GBP/JPY pair.

The expectation is that the administration of US President Joe Biden will give the go-ahead for military actions in retaliation to the recent drone attack on a US outpost in Jordan. This attack led to the loss of three US troops and left at least 24 individuals injured.

December’s Unemployment Rate, which comes from the Ministry of Health, Labor and Welfare, showed a reduction in the percentage of unemployed people in Japan. The report showed a contracted figure of 2.4% against the market consensus of remaining consistent at 2.5%. Furthermore, the investors will eye on Retail Trade data scheduled to be released on Wednesday. The annual rate is predicted to print a reading of 4.7% in December, contracting from 5.3% prior