Mid-212.00s: British Pound gains against Yen on hawkish BoE and weak Japanese data

A second consecutive daily advance lifts GBP/JPY. Several supportive factors underpin the move.
Weak domestic figures weigh on the JPY, although the risk of intervention could contain further declines.
With the USD weakening, the BoE’s hawkish stance lends the GBP additional support and bolsters the cross.

GBP/JPY reaches the mid-212.00s. Buying interest extends into a second consecutive day during the first half of Tuesday’s European session, with several factors supporting the cross.

Japan's Household Spending contracted by 6.8% year on year in September, according to figures published earlier today. This was the 10th consecutive monthly decline and the steepest since September 2020. The weakness complicates the Bank of Japan's (BoJ) plans to raise interest rates further. Together with the prevailing appetite for risk, it leaves the Japanese Yen (JPY) underperforming and supports GBP/JPY.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

The British Pound (GBP) retains a firm yield advantage as the Bank of England (BoE) has maintained a more hawkish communication stance than the BoJ. A weaker US Dollar (USD) also supports sterling, providing another source of support for GBP/JPY. However, speculation that authorities will intervene to support the domestic currency, alongside bets on an imminent BoJ rate increase, keeps JPY bears on high alert.

With underlying inflation having reached the central bank's 2% target, some policymakers urged a faster pace of interest rate increases, the Summary of Opinions from the BoJ's October monetary policy meeting showed. Against that backdrop, waiting for follow-through buying before positioning for further GBP/JPY gains remains prudent. For fresh direction, traders are turning to Wednesday's preliminary UK Q3 GDP release.

This Week: Pound Sterling Performance

The British Pound recorded its strongest performance against the US Dollar this week. Its percentage changes against the major currencies listed are set out below.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.89%	-0.76%	-0.21%	-0.02%	-0.75%	-1.34%	-0.06%
EUR	0.89%		0.15%	0.69%	0.89%	0.24%	-0.44%	0.85%
GBP	0.76%	-0.15%		0.53%	0.73%	0.10%	-0.60%	0.70%
JPY	0.21%	-0.69%	-0.53%		0.18%	-0.61%	-1.13%	0.09%
CAD	0.02%	-0.89%	-0.73%	-0.18%		-0.76%	-1.35%	-0.01%
AUD	0.75%	-0.24%	-0.10%	0.61%	0.76%		-0.68%	0.51%
NZD	1.34%	0.44%	0.60%	1.13%	1.35%	0.68%		1.32%
CHF	0.06%	-0.85%	-0.70%	-0.09%	0.00%	-0.51%	-1.32%

Percentage movements between major currencies are presented in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For example, choosing the British Pound on the left and following its row across to the US Dollar gives the percentage change for GBP (base)/USD (quote) in the intersecting cell.