The British pound (GBP) fell sharply against the Japanese yen (JPY) on Tuesday as the yen strengthened broadly across major currencies, rebounding from recent losses driven by Japan’s political and fiscal uncertainty. At the time of writing, GBP/JPY trades around 201.70, down nearly 1% on the day and hovering near a two-week low.
Yen strengthens amid intervention signals
The yen found renewed support after US Treasury Secretary Scott Bessent urged Tokyo to maintain “sound monetary policy formulation and communication” during discussions with Japan’s Finance Minister Satsuki Katayama in Tokyo.
Bessent noted that Japan’s economic landscape had evolved significantly since the Abenomics era, calling on policymakers to align their policy stance with current fundamentals and avoid “excess exchange-rate volatility.”
Japan’s Economy Minister Minoru Kiuchi also struck a measured tone earlier in the day, acknowledging both the advantages and downsides of a weaker currency. He said that while yen depreciation “boosts exporters’ profits and domestic capital expenditure,” it also “raises import costs and reduces the purchasing power of households and smaller firms.” Kiuchi emphasized that “FX moves must reflect fundamentals and remain stable,” underscoring the government’s focus on avoiding “rapid, short-term fluctuations” in exchange rates to preserve economic stability.
Trade optimism adds to JPY momentum
Separately, US President Donald Trump met Japanese Prime Minister Sanae Takaichi in Tokyo on Tuesday for bilateral talks centered on trade and economic security. Both sides announced a new agreement on rare-earth and critical minerals aimed at reinforcing supply chains and reducing dependency on China. Japan also pledged to expand imports of US agricultural goods and vehicles, signaling stronger trade cooperation between the two allies.
Focus turns to BoJ and BoE policy outlooks
Investors are now shifting attention to the Bank of Japan (BoJ) policy decision due Thursday. The central bank is widely expected to keep its benchmark rate at 0.50%, but markets will closely monitor Governor Kazuo Ueda’s remarks for hints of any potential policy adjustments before year-end.
In the UK, focus is turning toward the Bank of England (BoE) meeting on November 6. A Reuters poll published Tuesday indicated the BoE will likely hold rates at 4.00% through the end of 2025 before initiating cuts in early 2026.
The survey showed 34 of 63 economists expect no change this quarter, while 29 forecast a single rate cut. Inflation is projected to decline to 3.6% this quarter, averaging 2.5% in 2026 and 2.1% in 2027, with interest rates expected to ease to 3.75% by March and 3.50% by mid-2026.
