GBP/JPY steadies as intervention fears bolster Yen after weak UK data

• GBP/JPY steadies on Friday after early losses, as renewed intervention fears boosted demand for the Japanese Yen.
• Japan’s Finance Minister Katayama warns against speculative FX moves, signals readiness to act.
• Weak UK Retail Sales data offered limited support to the British Pound.

GBP/JPY trades flat on Friday after slipping earlier in the European session, as the Japanese Yen (JPY) strengthened amid rising intervention fears. The move comes as USD/JPY trades within striking distance of the 160.00 level, a key zone that previously prompted action from Japanese authorities.

At the time of writing, GBP/JPY is trading around 212.60, rebounding from an intraday low near 212.23.

Intervention fears intensified after Japan’s Finance Minister Satsuki Katayama said authorities are “monitoring market developments with high vigilance.” She flagged “speculative FX moves driven by Oil prices” and said a G7 finance ministers’ meeting will be held, stressing readiness to “take decisive steps on forex.”

Meanwhile, the Bank of Japan (BoJ) said Japan’s natural rate of interest is estimated in the range of -0.9% to 0.5%, compared with -1.0% to 0.5% previously, noting that the upward shift reflects an improvement in the country’s potential growth rate and stronger risk appetite among market participants.

Adding to the hawkish tone, former Bank of Japan (BoJ) Governor Haruhiko Kuroda said the ongoing Iran war could accelerate the pace of rate hikes rather than delay them, adding that Japan is on a stable growth path, reducing the need for continued monetary easing. Kuroda also noted that there would be no issue with raising the policy rate three to four times through next year, potentially taking it to around 1.5%.

In the UK, Retail Sales data did little to support the British Pound, with monthly sales falling 0.4% in February, beating expectations for a 0.8% decline, following a 2.0% increase in January.

On an annual basis, Retail Sales rose 2.5%, slightly above forecasts of 2.1%, but eased from 4.8% previously. Meanwhile, Retail Sales excluding fuel also declined 0.4% MoM, beating expectations for a 0.8% drop, after a 2.2% increase in January, while the YoY figure came in at 3.4%, down from 5.9%.