GBP/JPY weakens to near two-week low as Yen firms on intervention risk and trade optimism

The British Pound (GBP) fell sharply against the Japanese Yen (JPY) on Tuesday as the Yen strengthened across major peers, recovering from recent weakness tied to Japan’s political and fiscal developments. At the time of writing, GBP/JPY trades around 201.70, down nearly 1% on the day, hovering near a one-week low.

The Yen found renewed support after US Treasury Secretary Scott Bessent called on Tokyo to pursue “sound monetary policy formulation and communication” during talks with Finance Minister Satsuki Katayama in Tokyo. Bessent highlighted that Japan’s economic landscape had changed significantly since the introduction of Abenomics, urging policymakers to ensure that policy settings align with current fundamentals and help prevent “excess exchange-rate volatility.”

Adding to the narrative, Japan’s Economy Minister Minoru Kiuchi struck a balanced tone earlier on Tuesday, acknowledging both the benefits and drawbacks of a weaker Yen. Kiuchi said that while depreciation “boosts exporters’ profits and domestic capital expenditure,” it also “raises import costs and reduces the purchasing power of households and smaller firms.” He stressed that “FX moves must reflect fundamentals and remain stable,” reiterating that avoiding “rapid, short-term fluctuations” in exchange rates is critical for Japan’s economic stability.

Separately, US President Donald Trump met Japanese Prime Minister Sanae Takaichi in Tokyo on Tuesday for bilateral talks focused on trade and economic security. Both sides announced a new agreement on rare-earth and critical minerals aimed at strengthening supply chains and reducing dependency on China. Japan also pledged to increase imports of US agricultural products and vehicles.

Markets now turn their focus to the Bank of Japan (BoJ) policy decision due Thursday, with the central bank expected to keep its benchmark rate at 0.50%. Investors will watch Governor Kazuo Ueda’s press conference for clues on whether the BoJ plans to adjust its ultra-loose stance or stick with a patient approach through year-end.

In the UK, traders eye the Bank of England (BoE) meeting on November 6. A Reuters poll published on Tuesday showed the central bank will likely keep interest rates at 4.00% through year-end before starting to cut in early 2026. The survey found 34 of 63 economists expect no change this quarter, while 29 forecast one cut. Economists project inflation will ease to 3.6% this quarter, averaging 2.5% in 2026 and 2.1% in 2027, with rates seen at 3.75% by March and 3.50% by mid-2026.