GBP/JPY attempts to surpass 161.70, BoE to pause rate hike cycle to fade slowdown fears

The GBP/JPY pair is looking to surpass the immediate resistance of 161.70 in the early Tokyo session. The cross has tried multiple times to deliver an upside break of 161.70, however, the Pound Sterling was not getting the required strength.

Mixed views from Bank of Japan (BoJ) officials are triggering volatility for the Japanese Yen. BoJ Deputy Governor Masayoshi Amamiya said on Monday, “The BoJ has already shifted to a sustainable monetary easing framework, so it is appropriate to maintain current policy given underlying price moves.” He further added, “What is more difficult is to decide whether conditions have been met to exit easy policy, and how to communicate BoJ’s intentions.”

The official sounds dovish despite the Japanese administration looking for a quick transition from the decade-long expansionary policy to make the Japanese Yen a strong contender against rival currencies.

Meanwhile, escalating signs of a slowdown in the United Kingdom economy due to higher interest rates by the Bank of England (BoE) has strengthened the case of pausing further hikes. The UK economy has been a laggard in demonstrating inflation softening. Despite a string of interest rate hikes, the BoE has failed in easing inflation from the double-digit figure led by higher food inflation and strong labor demand.

For further guidance, investors' focus will be on the fresh talks between UK Foreign Secretary James Cleverly and Conservative rebels for a post-Brexit deal on Northern Ireland. Earlier, UK Prime Minister Rishi Sunak was forced to pause the deal after a backlash from Senior Tories.