GBP/JPY edges higher to near 199.30 as UK gilts rebound faster than Japan's bonds

• GBP/JPY gains slightly to near 199.30 as long-dated bond yields in the UK correct faster than in Japan.
• BoE's Bailey acknowledged market expectations of uncertainty over further interest rate cuts in the remainder of the year.
• Investors await key UK Retail Sales data for July.

The GBP/JPY pair ticks up to near 199.30 during the European trading session on Thursday. The cross edges higher as the Pound Sterling (GBP) gains, following a decent recovery in demand for United Kingdom (UK) long-dated gilts.

Lately, both the GBP and the Japanese Yen (JPY) were facing a sharp selling pressure as long-term government borrowing costs in both the UK and Japan soared due to mounting debt concerns.

30-year UK gilt yields have corrected 3.3% from its recent highs of 5.75% to near 5.50%. Meanwhile, yields on 30-year Japan Government Bonds (JGBs) have also declined but at a slower pace. 30-year JGB yields are down 1.8% to near 3.25% from its all-time high of 3.3%.

Another reason behind strength in the Pound Sterling is comments from Bank of England (BoE) Governor Andrew Bailey, in a hearing before the House of Commons' Treasury Committee on Wednesday, signaling uncertainty over the pace of interest rate cuts.

BoE Governor Bailey said, "There is considerably more doubt on how fast we can cut rates, and added market pricing suggests my message has been understood." Traders see an almost 33% chance that the BoE will cut interest rates one more time in the remainder of the year, Reuters reported.

Going forward, investors will focus on the UK Retail Sales data for July, which will be released on Friday.