British Pound hits fresh two-month high vs Yen ahead of BoE decision on Thursday

GBP/JPY attracts some dip-buyers on Wednesday as firming BoE rate hike bets underpin the GBP.
A weaker USD and intervention risks boost the JPY, keeping a lid on further gains for spot prices.
Traders also seem hesitant ahead of the key central bank event – the BoE meeting on Thursday.

Haresh Menghani FXStreet

The GBP/JPY cross reverses an intraday dip to the 212.00 neighborhood, hitting a fresh two-month high during the first half of the European session on Wednesday. Spot prices currently trade just below mid-213.00s, up around 0.20% for the day, and seem poised to prolong a one-week-old uptrend.

The British Pound (GBP) continues to draw support from the growing acceptance that the Bank of England (BoE) will adopt a more hawkish stance as the risk of persistent inflation keeps pressure on policymakers. Traders have priced in a near-certain 25-basis-point (bps) BoE rate hike on Thursday. Adding to this, easing fiscal concerns following the recent UK budget updates further underpin the GBP, which, in turn, is seen as a tailwind for the GBP/JPY cross.

Meanwhile, the Japanese Yen (JPY) continues with its relative underperformance against its British counterpart amid the uncertainty over the timing of the next rate hike by the Bank of Japan (BoJ). However, speculation that authorities will step in to prop up the domestic currency helps limit deeper losses. In fact, Japan's Finance Minister Satsuki Katayama reiterated on Monday that the government is prepared to act to curb excessive or disorderly weakness in the JPY.

Furthermore, a broadly weaker US Dollar (USD) turns out to be another factor that benefits the JPY, which, in turn, might keep a lid on further gains for the GBP/JPY cross. Moreover, traders might refrain from placing aggressive directional bets and opt to move to the sidelines ahead of the crucial BoE policy meeting on Thursday. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for spot prices remains to the upside.

Pound Sterling Price This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.82%	-0.71%	0.43%	-0.10%	0.38%	0.08%	-0.95%
EUR	0.82%		0.08%	1.21%	0.69%	1.12%	0.90%	-0.16%
GBP	0.71%	-0.08%		0.96%	0.59%	1.04%	0.80%	-0.23%
JPY	-0.43%	-1.21%	-0.96%		-0.51%	-0.06%	-0.42%	-1.47%
CAD	0.10%	-0.69%	-0.59%	0.51%		0.47%	0.09%	-0.85%
AUD	-0.38%	-1.12%	-1.04%	0.06%	-0.47%		-0.24%	-1.26%
NZD	-0.08%	-0.90%	-0.80%	0.42%	-0.09%	0.24%		-1.09%
CHF	0.95%	0.16%	0.23%	1.47%	0.85%	1.26%	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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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