BoJ sees little impact on policy due to election, Yen dips

The Japanese yen has posted small gains on Tuesday. In the European sesssion, USD/JPY is trading at 147.51, up 0.10% on the day. Earlier, the yen weakened as much as 0.4% before paring these losses.

Will Ishiba cling to power?

The fallout continues from the coalition's stinging election defeat on Sunday. The coalition lost its majority in parliament after failing to hold onto a majority in the upper house.

The immediate question is whether Prime Minister Ishiba will keep his job after the election debacle. Ishiba has declared he will remain in office, there have already been calls for his resignation and his days as prime minister may be numbered.

Ishiba has said he will stay on in order to combat inflation and continue the high-stake trade talks with the United States. President Trump has threatened to slap Japan with 25% tariffs if a deal is not reached by Aug. 1. High inflation was a key factor in the government's defeat - consumers have been squeezed by inflation, which has exceeded wage growth. Rice, a food staple, has soared over 100% in price since a year ago, causing a full-blown crisis.

Report: BoJ won't change policy due to election

Ishiba's weakened state may hurt Japan at the bargaining table but a report on Tuesday stated that the election result will not affect the Bank of Japan's monetary policy. The Japanese yen moved lower after the report.

The coalition can no longer pass legislation but is not in danger of falling and is expected to cooperate with the opposition. This could include agreeing to the opposition's demands to increase fiscal spending and cut taxes. Those moves would raise inflation which could impact on the BoJ's rate path.

GBP/USD technical

• GBP/USD has pushed above resistance above 1.4739 and is tested resistance at 1.4751 earlier. Next, there is resistance at 1.4772.

• 1.4718 and 1.4672 are the next support levels.

USD/JPY 1-Day Chart, July 22, 2025