British Pound extends gains to fresh monthly peak, around mid-217.00s vs weaker Yen
- GBP/JPY regains positive traction on Tuesday amid the prevailing JPY selling bias.
- Japan’s fiscal woes and the wide interest rate gap continue to weigh on the JPY.
- The supportive fundamental backdrop supports prospects for additional gains.
The GBP/JPY cross catches fresh bids on Tuesday and climbs to its highest level since July 30, around mid-217.00s during the first half of the European session. Moreover, the prevailing selling bias surrounding the Japanese Yen (JPY) backs the case for an extension of the recent well-established uptrend witnessed since the beginning of this month.
Investors remain worried over Japan's worsening fiscal condition due to surging long-term interest rates, a massive national debt burden, and expansionary budget pressures. Moreover, Japan's economy faces headwinds due to increased import costs amid supply chain strains as a result of the Middle East conflict and disruptions around the Strait of Hormuz. These have been key factors behind the JPY's underperformance and supporting the GBP/JPY cross.
Meanwhile, the Bank of Japan's (BoJ) benchmark interest rate, despite bets for a faster policy tightening, is projected to remain below 1.5% by the end of this year. On the other hand, the Bank of England (BoE) base rate is projected to finish 2026 unchanged at 3.75%, still leaving a wide gap of around 225-250 basis points (bps). This might continue to fuel the so-called JPY carry trade and validates the near-term positive outlook for the GBP/JPY cross.
The British Pound (GBP), on the other hand, remains on the back foot amid a broadly firmer US Dollar (USD) and does little to provide any meaningful impetus to the currency pair. Nevertheless, spot prices have reversed a significant portion of losses led by a rare US-Japan joint intervention in late July. Moreover, the fundamental backdrop backs the case for a further near-term appreciating move. Hence, any corrective pullback is likely to be bought into.
US Dollar Price This Month
The table below shows the percentage change of US Dollar (USD) against listed major currencies this month. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.16% | -1.24% | -0.06% | -1.10% | -1.66% | -1.26% | -0.19% | |
| EUR | 1.16% | -0.09% | 1.12% | 0.09% | -0.49% | -0.10% | 0.98% | |
| GBP | 1.24% | 0.09% | 1.22% | 0.18% | -0.43% | -0.01% | 1.08% | |
| JPY | 0.06% | -1.12% | -1.22% | -0.99% | -1.73% | -1.39% | -0.18% | |
| CAD | 1.10% | -0.09% | -0.18% | 0.99% | -0.62% | -0.64% | 0.99% | |
| AUD | 1.66% | 0.49% | 0.43% | 1.73% | 0.62% | 0.42% | 1.52% | |
| NZD | 1.26% | 0.10% | 0.00% | 1.39% | 0.64% | -0.42% | 1.09% | |
| CHF | 0.19% | -0.98% | -1.08% | 0.18% | -0.99% | -1.52% | -1.09% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
