GBP/JPY rises to near 213.00 as Yen underperforms ahead of BoJ’s policy

GBP/JPY moves higher to near 213.10 amid weakness in the Japanese Yen.
The BoJ is expected to leave interest rates unchanged at 0.75% on Friday.
More-than-expected UK inflation increase is expected to diminish dovish BoE expectations.

Sagar Dua FXStreet

The GBP/JPY pair trades 0.22% higher to near 213.10 at the start of the European trading session on Thursday. The pair gains as the Japanese Yen (JPY) underperforms across the board ahead of the monetary policy announcement by the Bank of Japan (BoJ) on Friday.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.01%	-0.02%	0.24%	-0.06%	-0.62%	-0.23%	-0.09%
EUR	0.00%		-0.01%	0.24%	-0.05%	-0.61%	-0.22%	-0.08%
GBP	0.02%	0.01%		0.26%	-0.04%	-0.60%	-0.21%	-0.07%
JPY	-0.24%	-0.24%	-0.26%		-0.28%	-0.82%	-0.46%	-0.30%
CAD	0.06%	0.05%	0.04%	0.28%		-0.55%	-0.17%	-0.02%
AUD	0.62%	0.61%	0.60%	0.82%	0.55%		0.40%	0.54%
NZD	0.23%	0.22%	0.21%	0.46%	0.17%	-0.40%		0.14%
CHF	0.09%	0.08%	0.07%	0.30%	0.02%	-0.54%	-0.14%

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).

Investors expect the BoJ to hold interest rates steady at 0.75%, and leave the door open for interest rate hikes this year. Market participants will also focus on the BoJ’s Q4 Outlook report to get fresh cues about the current state of the economy.

On the fiscal front, Japan’s Prime Minister (PM) Sanae Takaichi is prepared to dissolve the parliament’s lower house on January 23. Takaichi called an early snap election to get more seats, increasing her odds to pass fiscal budget for the year. Takaichi has also announced removing the consumption tax to boost household spending, a scenario that could prompt inflationary pressures.

Meanwhile, the Pound Sterling (GBP) trades with caution even as faster-than-projected growth in the United Kingdom (UK) inflation in December has raised concerns over expectations of interest rate cuts by the Bank of England (BoE) in the near term. The data showed on Wednesday that the UK headline Consumer Price Index (CPI) rose at an annualized pace of 3.4%, faster than 3.3% estimates and the November reading of 3.2%.

Going forward, investors will focus on the UK Retail Sales data for December and the preliminary S&P Global Purchasing Managers’ Index (PMI) data for January, scheduled for Friday.

(This story was corrected at 08:00 GMT to say in the first paragraph that the pair gains as the Japanese Yen (JPY) underperforms across the board ahead of the monetary policy announcement by the Bank of Japan (BoJ) on Friday, and not Thursday.)

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 loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.