Two-month high: British Pound climbs to fresh peak against Yen ahead of Thursday’s BoE decision

Stronger BoE rate hike expectations support GBP, drawing buyers to GBP/JPY dips on Wednesday.
JPY support from USD weakness and intervention risks limits the scope for further spot gains.
Thursday’s BoE meeting also appears to be keeping traders cautious ahead of the key central bank decision.

GBP/JPY is up around 0.20% on the day. Trading just below the mid-213.00s, the cross recovered from an intraday dip towards 212.00 to reach a fresh two-month high in the first half of Wednesday’s European session. The week-long uptrend appears set to extend.

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Traders now price in a near-certain 25-basis-point (bps) rate hike by the Bank of England (BoE) on Thursday. Expectations of a more hawkish stance continue to strengthen as persistent inflation risks maintain pressure on policymakers, supporting the British Pound (GBP). Fiscal concerns have also eased following the recent UK budget updates. This provides additional support for GBP and is viewed as a positive driver for GBP/JPY.

Uncertainty over when the Bank of Japan (BoJ) will next raise rates leaves the Japanese Yen (JPY) lagging its British counterpart. Expectations of official intervention to support the domestic currency are, however, helping to contain further losses. On Monday, Japan's Finance Minister Satsuki Katayama again said the government was ready to act against excessive or disorderly JPY weakness.

Broad-based US Dollar (USD) weakness provides another source of support for JPY and could restrict further GBP/JPY gains. With Thursday’s crucial BoE policy meeting approaching, traders may also stay on the sidelines rather than take aggressive directional positions. Even so, the fundamental factors outlined above suggest that spot prices still face less resistance on the upside.

Pound Sterling Performance This Week

This week’s percentage moves in the British Pound (GBP) against the major currencies listed appear in the table below. The Australian Dollar was the currency against which the Pound recorded its strongest performance.

	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 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. Selecting the British Pound on the left and reading across to the US Dollar, for instance, gives the percentage change for GBP (base)/USD (quote) in the corresponding cell.