GBP/JPY holds near five-week highs amid Yen softness, UK CPI in focus

GBP/JPY holds near five-week highs as the Yen stays soft on Japan’s fiscal stimulus push and cautious BOJ stance.
UK sentiment remains cautious ahead of the November 26 Budget.
All eyes on UK CPI report due on Wednesday, with softer inflation likely to reinforce BoE rate cut expectations.

Vishal Chaturvedi FXStreet

The British Pound strengthens against the Japanese Yen on Tuesday as the Yen remains under pressure amid Japan’s expansionary fiscal plans and the Bank of Japan’s (BoJ) cautious approach to policy tightening. At the time of writing, GBP/JPY is trading around 204.25, hovering close to the more-than-five-week high reached on Monday.

However, sentiment around the Pound remains fragile as markets brace for the November 26 UK Budget, with uncertainty over the government’s tax and spending plans. Recent reports suggest the Treasury is exploring alternative revenue options after dropping a proposed income-tax increase, including the possibility of a new property-related levy.

At the same time, growing bets on a December Bank of England (BoE) rate cut are weighing on Sterling. Investors are reacting to signs of cooling momentum in the UK economy, including softer wage growth and a rise in unemployment, while inflation appears to have passed its peak.

Attention now turns to October's Consumer Price Index (CPI) report due on Wednesday, with headline inflation expected to ease to 3.6% YoY from 3.8% and core inflation seen edging down to 3.4% from 3.5%.

Adding to the cautious mood, BoE Chief Economist Huw Pill struck a balanced but slightly dovish tone on Tuesday, saying policymakers are now navigating “a series of quite finely balanced decisions.” Speaking at a Natixis event, Pill noted that underlying inflation pressures in the UK are “probably not as strong as the headline figures suggest.”

He cautioned against over-interpreting the latest data, highlighting unusual noise in several key indicators, but added that if evidence of persistent economic slack becomes clearer, he would feel “compelled to act.”

In Japan, expansionary fiscal plans and the BoJ’s gradual approach to policy adjustments continue to weigh on the Yen.

Earlier in the day, a meeting between BOJ Governor Kazuo Ueda and Prime Minister Sanae Takaichi also failed to offer any support to the Yen. Ueda told the Prime Minister that the BOJ is “in the process of making gradual adjustments to the degree of monetary easing,” adding that the Bank aims to deliver a “smooth, stable landing” toward its 2% inflation target. He later confirmed that Takaichi made no specific request regarding monetary policy.

Japan’s Finance Minister Satsuki Katayama voiced concern over the Yen’s moves through verbal intervention, saying the government is “alarmed” by the currency’s recent moves and will closely monitor markets for excessive or disorderly behaviour.

Economic Indicator

Consumer Price Index (YoY)

The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Why it matters to traders?

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

Author

Vishal Chaturvedi

FXStreet

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

AUD/USD eyes 0.7150 barrier nine-day EMA

AUD/USD inches higher after registering modest losses in the previous day, trading around 0.7130 during the Asian hours. The technical analysis of the daily chart indicates that the pair is moving sideways within the rectangle pattern, suggesting a consolidation as neither the bulls nor the bears have enough momentum to take control of the market.

USD/JPY trades below 160.00 intervention threshold; bullish bias intact

The USD/JPY pair attracts some sellers during the Asian session amid fears that authorities will step in again to prop up the Japanese Yen. Furthermore, the Israel-Lebanon truce prompts some profit-taking around the US Dollar and exerts downward pressure on the currency pair.

Gold puts its 200-day SMA to the test near $4,420

Gold keeps the bullish stance in place in the latter part of Thursday’s session, although a convincing break above the key $4,500 mark per troy ounce still remains elusive. The precious metal’s advance comes amid the resurgence of some selling interest around the Greenback, improving risk sentiment, and declining US Treasury yields across the board.

Bitcoin’s massive storm is back: Why the sell-off is far from over

Bitcoin price action over the last few weeks has felt less like a normal, healthy correction and more like a slow grinding crash that continues to wreak havoc on holdings and trading accounts. And everything suggests that the dramatic crash isn’t over.

Nonfarm payrolls: Testing the limits of Fed policy patience

The upcoming nonfarm payrolls report for May will provide the final update on the US labor market before Kevin Warsh attends his first policy meeting as the new Fed Chair later this month.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.