- GBP/JPY is expected to drop to near 162.00 amid BOJ planning on intervention in the currency market.
- UK PM Liz Truss has announced a reduction in tax slabs and a cap on energy and electricity prices.
- A rate hike announcement by the BOE will widen the BOE-BOJ policy divergence further.
The GBP/JPY pair has surrendered the critical support of 162.20 in the Asian session and is declining towards 162.00 modestly. The asset has turned bearish after a downside break of the consolidation formed in a 162.80-164.47 range. The cross has shifted into the negative trajectory despite accelerating odds of further expansion in Bank of England (BOE)-Bank of Japan (BOJ) policy divergence.
Price pressures in the UK economy are acting as headwinds for UK households. The latter is forced to make inflation-adjusted payouts with penny-worth increments in earnings. No doubt, the labor market conditions, growth prospects, and energy prices are not supporting a rate hike by the BOE. However, BOE Governor has to swallow the bitter gulp and announce a rate hike by 50 basis points (bps).
Meanwhile, operations from new UK Prime Minister Liz Truss seem favorable for the economy led by the announcement of a reduction in tax slabs, a cap on energy and electricity prices, and a trade deal with the US. In spite of this fact, the pound bulls are not getting stronger.
On the Tokyo front, BOJ's warning o intervention in the currency market is supporting the Japanese yen. Japan’s former Vice FM Tatsuo Yamasaki cited that the Japanese administration is ready to intervene in currency markets at any moment if needed, news wires from Bloomberg. He further added that the government doesn’t need to wait for a green light from the US to support the yen.
The approach to monetary policy by the BOJ is expected to remain ‘neutral’ as growth prospects and inflation catalysts still need care from the economy. This will widen the BOE-BOJ policy divergence further.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD bounces off lows, retests 1.1370
Following an early drop to the vicinity of 1.1310, EUR/USD now manages to regain pace and retargets the 1.1370-1.1380 band on the back of a tepid knee-jerk in the US Dollar, always amid growing optimism over a potential de-escalation in the US-China trade war.
GBP/USD trades slightly on the defensive in the low-1.3300s
GBP/USD remains under a mild selling pressure just above 1.3300 on Friday, despite firmer-than-expected UK Retail Sales. The pair is weighed down by a renewed buying interest in the Greenback, bolstered by fresh headlines suggesting a softening in the rhetoric surrounding the US-China trade conflict.
Gold remains offered below $3,300
Gold reversed Thursday’s rebound and slipped toward the $3,260 area per troy ounce at the end of the week in response to further improvement in the market sentiment, which was in turn underpinned by hopes of positive developments around the US-China trade crisis.
Ethereum: Accumulation addresses grab 1.11 million ETH as bullish momentum rises
Ethereum saw a 1% decline on Friday as sellers dominated exchange activity in the past 24 hours. Despite the recent selling, increased inflows into accumulation addresses and declining net taker volume show a gradual return of bullish momentum.
Week ahead: US GDP, inflation and jobs in focus amid tariff mess – BoJ meets
Barrage of US data to shed light on US economy as tariff war heats up. GDP, PCE inflation and nonfarm payrolls reports to headline the week. Bank of Japan to hold rates but may downgrade growth outlook. Eurozone and Australian CPI also on the agenda, Canadians go to the polls.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.