• GBP/JPY attracts some sellers to near 188.70 in Monday’s early European session, down 1.27% on the day. 
• A rebound in Japanese 2Q GDP supports the case for a rate hike by the BoJ. 
• The preliminary UK August S&P Global/CIPS Manufacturing PMI and Japanese July National CPI will be the highlights this week. 

The GBP/JPY cross weakens around 188.70 on Monday during the early European trading hours. Hawkish sentiment surrounding the Bank of Japan (BoJ) and the stronger Japanese second-quarter Gross Domestic Product (GDP) data support the rally of the Japanese Yen (JPY) and drag the cross lower. 

Investors seem to be optimistic that Japan's better second-quarter GDP report last week would convince the Bank of Japan (BoJ) to raise interest rates further, which boosts the JPY broadly. The Japanese economy grew by 0.8% quarter-on-quarter in Q2, beating the market estimation of 0.5%.

Kazutaka Maeda, an economist at Meiji Yasuda Research Institute, said that the reports are simply positive overall and “it supports the BoJ’s view and bodes well for further rate hikes, although the central bank would remain cautious as the last rate increase had caused a sharp spike in the Yen.”