British Pound reaches new two-month high against Yen as Thursday’s BoE decision approaches

Firmer expectations of a BoE rate rise support GBP, drawing buyers to GBP/JPY on Wednesday’s dip.
Further upside is constrained as USD weakness and the risk of intervention lend support to JPY.
With Thursday’s pivotal BoE meeting approaching, traders also appear reluctant to commit.

Up around 0.20% on the day, GBP/JPY is currently trading just below the mid-213.00s after recovering from an intraday decline towards 212.00. The cross reached a new two-month high in the first half of Wednesday’s European session and looks set to extend its week-long advance.

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

A 25-basis-point (bps) rate rise by the Bank of England (BoE) on Thursday is priced in as a near certainty. This reflects growing conviction that the central bank will take a more hawkish position, with the risk of persistent inflation maintaining pressure on policymakers and supporting the British Pound (GBP). Meanwhile, concerns over the public finances have eased following the recent UK budget updates. This provides additional backing for GBP and is consequently viewed as supportive of the GBP/JPY cross.

Uncertainty about when the Bank of Japan (BoJ) will next raise rates continues to leave the Japanese Yen (JPY) lagging sterling. Expectations that the authorities could intervene to support the currency are, however, helping to contain its losses. On Monday, Japan's Finance Minister Satsuki Katayama reaffirmed the government’s readiness to take action against excessive or disorderly JPY weakness.

Broad-based weakness in the US Dollar (USD) is also supporting JPY and could therefore restrict further advances in GBP/JPY. With Thursday’s crucial BoE policy decision ahead, traders may also choose to remain on the sidelines rather than take sizeable directional positions. Even so, the fundamental factors outlined above suggest that spot prices still face less resistance to a move higher than to a decline.

Pound Sterling Gains Most Against Australian Dollar This Week

Against the major currencies listed below, the British Pound (GBP) has recorded its strongest performance this week versus the Australian Dollar. The table sets out its percentage changes against each currency.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.82%	-0.71%	0.43%	-0.10%	0.38%	0.08%	-0.95%
EUR	0.82%		0.08%	1.21%	0.69%	1.12%	0.90%	-0.16%
GBP	0.71%	-0.08%		0.96%	0.59%	1.04%	0.80%	-0.23%
JPY	-0.43%	-1.21%	-0.96%		-0.51%	-0.06%	-0.42%	-1.47%
CAD	0.10%	-0.69%	-0.59%	0.51%		0.47%	0.09%	-0.85%
AUD	-0.38%	-1.12%	-1.04%	0.06%	-0.47%		-0.24%	-1.26%
NZD	-0.08%	-0.90%	-0.80%	0.42%	-0.09%	0.24%		-1.09%
CHF	0.95%	0.16%	0.23%	1.47%	0.85%	1.26%	1.09%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. To read GBP (base)/USD (quote), for instance, locate the British Pound on the left and follow that row across to the US Dollar column; the intersecting cell gives the percentage change.