The GBP/JPY pair experienced a turnaround in its intraday losses following the Bank of Japan’s decision to raise the short-term rate target by 15 basis points to 0.15%-0.25%. Despite the rate hike, the Japanese Yen lost ground against the Pound Sterling, with the GBP/JPY cross trading around 196.20 during Asian trading hours. The BoJ also announced a reduction in Japanese government bond buying to ¥3 trillion per month, which will provide further insight into the country’s policy trajectory.
Chief Cabinet Secretary Yoshimasa Hayashi emphasized the close coordination between the Bank of Japan and the government to implement appropriate monetary policies aimed at achieving the inflation target. This collaboration is crucial for maintaining economic stability and supporting growth in Japan. The BoJ Press Conference will provide additional clarity on the future direction of monetary policy in the country.
On the GBP front, traders are anticipating a potential rate cut by the Bank of England on Thursday, which is weighing on the Pound Sterling and limiting the upside of the GBP/JPY cross. There is a 58% probability of a 25 basis point cut in borrowing costs by the BoE, adding to the downward pressure on the GBP. Additionally, the US Federal Reserve is expected to maintain rates in July, but there are growing expectations of a rate cut in September, which could impact the USD and support riskier currencies like the British Pound.
Overall, the GBP/JPY pair remains volatile amidst central bank decisions and economic developments in both the UK and Japan. Traders are closely monitoring the BoJ’s actions and the potential rate cut by the BoE, which could drive further movement in the currency pair. The upcoming Fed decision will also provide insight into the global economic landscape and impact currency movements. As such, traders should remain vigilant and adapt their strategies to navigate the ever-changing forex market landscape.
