GBP/JPY retreats from five-month high near 197.00 after BoJ’s policy decision

GBP/JPY faces pressure after refreshing five-month high near 196.85 after the BoJ held interest rates unchanged at 0.5%.
The BoJ expects the underlying inflation to return to its target in the second-half of fiscal 2025-2027 period.
Investors expect the BoE to leave interest rates unchanged on Thursday.

Sagar Dua FXStreet

The GBP/JPY pair falls back to near 196.15 during late Asian trading hours on Tuesday after posting a fresh five-month high around 196.85 earlier in the day. The pair faces selling pressure as the Japanese Yen (JPY) attracts bids after the Bank of Japan (BoJ) announced the monetary policy, in which it left interest rates steady at 0.5% for the third consecutive meeting.

Japanese Yen PRICE Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the British Pound.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.00%	0.03%	-0.12%	0.02%	-0.18%	-0.21%	-0.04%
EUR	-0.01%		-0.01%	-0.10%	-0.00%	-0.16%	-0.13%	-0.07%
GBP	-0.03%	0.00%		-0.16%	0.00%	-0.15%	-0.17%	-0.06%
JPY	0.12%	0.10%	0.16%		0.14%	-0.06%	-0.08%	0.06%
CAD	-0.02%	0.00%	-0.00%	-0.14%		-0.27%	-0.15%	-0.07%
AUD	0.18%	0.16%	0.15%	0.06%	0.27%		0.01%	0.09%
NZD	0.21%	0.13%	0.17%	0.08%	0.15%	-0.01%		0.08%
CHF	0.04%	0.07%	0.06%	-0.06%	0.07%	-0.09%	-0.08%

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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

The BoJ was expected to hold borrowing rates at their current levels as Governor Kazuo Ueda had already guided that policymakers would tighten financial conditions when they get convinced that the underlying inflation will move around the central bank’s target of 2%.

Japanese central bank has predicted that the underlying inflation will come to its target in the 2nd half of fiscal 2025 to 2027 period. On global risks, the BoJ has stated that they will closely monitor the impact of trade war on financial, forex markets, domestic growth, and inflation.

Meanwhile, the Pound Sterling trades cautiously ahead of the United Kingdom (UK) Consumer Price Index (CPI) data on Wednesday and the Bank of England’s (BoE) monetary policy announcement on Thursday. Economists expect the UK inflation to have grown moderately, a scenario that will encourage traders to raise bets supporting the BoE to deliver more interest rate cuts this year.

On Thursday, the BoE is expected to leave interest rates steady at 4.25% as officials guided a “gradual and cautious” monetary easing approach in the May’s policy meeting, following an interest rate reduction by 25 basis points (bps).

Economic Indicator

BoJ Interest Rate Decision

The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.

GBP/USD keeps the bull run intact, still below 1.3500

GBP/USD manages to trade with acceptable gains around 1.3480 on Thursday. Conflicting signals from US and Iranian officials over a potential deal have kept markets cautious and capped Cable’s upside, while investors avoid taking sizeable positions ahead of Friday’s crucial US NFP report.

EUR/USD faces some downside pressure around 1.1540

EUR/USD retreats modestly after advancing for two consecutive days, slipping below 1.1550 on Thursday. In the meantime, markets remain cautious over the prospects of a US-Iran peace agreement and the reopening of the Strait of Hormuz, keeping demand for the safe-haven US Dollar intact and preventing spot from regaining momentum.

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