Hawkish BoE and weak Japanese data lift British Pound to mid-212.00s against Yen

A combination of supportive factors lifts GBP/JPY for a second consecutive day.
Weak domestic figures weigh on the JPY, although the risk of intervention could contain further declines.
With the USD softer, the BoE’s hawkish stance lends support to the GBP and provides a further lift to the cross.

The mid-212.00s come into reach for GBP/JPY in the first half of Tuesday’s European session, as a combination of favourable factors draws buyers to the cross for a second consecutive day.

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

Japan’s Household Spending declined 6.8% year on year in September, figures published earlier today showed. This was the 10th consecutive monthly fall 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 lends support to GBP/JPY.

The British Pound (GBP), meanwhile, retains a clear yield advantage as the Bank of England’s (BoE) communications have remained more hawkish than the BoJ’s. A weaker US Dollar (USD) also benefits sterling, providing another source of support for GBP/JPY. Nevertheless, speculation that the authorities will intervene to support the yen, alongside bets on an imminent BoJ rate rise, keeps JPY bears on alert.

The Summary of Opinions from the BoJ’s October monetary policy meeting showed that, with underlying inflation reaching the central bank’s 2% target, some policymakers advocated a faster pace of interest rate increases. Against that backdrop, waiting for follow-through buying before positioning for further GBP/JPY gains appears prudent. Attention now turns to Wednesday’s preliminary UK Q3 GDP release for fresh direction.

Pound Sterling Records Its Strongest Gain Against the US Dollar This Week

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

	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%

To read the heat map of percentage movements between major currencies, select the base currency in the left-hand column and the quote currency in the top row. For instance, 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 corresponding cell.