Why is the British Pound climbing to the mid-212.00s against the Yen amid a hawkish BoE and weak Japanese data?

Buying interest in GBP/JPY extends into a second consecutive day, supported by a mix of favourable factors.
The JPY comes under pressure from weak domestic figures, although the risk of intervention could contain further declines.
A weaker USD and the BoE’s hawkish stance underpin the GBP, providing additional support to the cross.

Buying interest keeps GBP/JPY on an upward path for a second consecutive day, with the cross reaching the mid-212.00s in the first half of Tuesday’s European session as several supportive factors come together.

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

The Japanese Yen (JPY) is underperforming as an upbeat risk mood combines with weak domestic data to support GBP/JPY. Figures published earlier today showed a 6.8% year-on-year fall in Japan’s Household Spending in September. The decline was the 10th in successive months and the steepest since September 2020, complicating the Bank of Japan’s (BoJ) plans to raise interest rates further.

The British Pound (GBP) continues to enjoy a clear yield advantage, with the Bank of England (BoE) maintaining a more hawkish tone than the BoJ. A weaker US Dollar (USD) is also helping the GBP, adding another source of support for GBP/JPY. Nevertheless, JPY bears remain watchful as speculation persists that authorities will intervene to support the domestic currency, alongside bets that a BoJ rate increase is imminent.

Calls from some policymakers to accelerate interest rate increases featured in the Summary of Opinions from the BoJ’s October monetary policy meeting, as underlying inflation reached the central bank’s 2% target. Against this backdrop, waiting for follow-through buying before positioning for further GBP/JPY gains remains prudent. Attention now turns to Wednesday’s preliminary UK Q3 GDP release for a fresh catalyst.

How Has Pound Sterling Performed This week?

The British Pound (GBP) recorded its strongest performance against the US Dollar this week. Its percentage moves against the major currencies listed are presented in the table 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 the major currencies are displayed in the heat map. Select the base currency from the left-hand column and the quote currency from 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.