British Pound advances to mid-212.00s vs Yen as hawkish BoE meets weak Japanese data

GBP/JPY gains positive traction for the second straight day amid a combination of supporting factors.
Dismal domestic data undermines the JPY, though intervention risks could help limit deeper losses.
The BoE’s hawkish tilt supports the GBP amid a softer USD, further acting as a tailwind for the cross.

The GBP/JPY cross attracts buyers for the second straight day and advances to mid-212.00s during the first half of the European session on Tuesday amid a combination of supporting factors.

Data released earlier today showed that Japan's Household Spending fell 6.8% from a year earlier in September, marking the 10th consecutive monthly decline and the sharpest drop since September 2020. This complicates the Bank of Japan's (BoJ) plans for further interest rate hikes, which, along with the prevailing risk-on mood, contributes to the Japanese Yen's (JPY) relative underperformance and acts as a tailwind for the GBP/JPY cross.

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Meanwhile, the Bank of England (BoE) maintained a hawkish communication relative to the BoJ, keeping the yield advantage firmly in favor of the British Pound (GBP). Moreover, a softer US Dollar (USD) further benefits the GBP, which is seen as another factor supporting the GBP/JPY cross. JPY bears, however, remain on high alert amid speculation that authorities will step in to prop up the domestic currency and bets on an imminent BoJ rate hike.

In fact, the Summary of Opinions from the BoJ's October monetary policy meeting revealed that some policymakers called for speeding up the pace of interest rate hikes as underlying inflation reached the central bank's 2% target. This, in turn, makes it prudent to wait for some follow-through buying before positioning for any further gains for the GBP/JPY cross. Traders now look to the preliminary UK Q3 GDP on Wednesday for a fresh impetus.

Pound Sterling Price This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the US Dollar.

	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%

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