GBP/JPY halted its retracement from the 200.35 level, the highest since July 2024, and staged a notable intraday recovery on Wednesday, lifting spot prices back above the mid-199.00s during Asian trading. The cross benefits from a supportive fundamental backdrop amid diminishing odds for an immediate Bank of England (BoE) rate cut.
Pound strength amid BOE outlook
The British Pound (GBP) continues to outperform against the Japanese Yen (JPY) as markets reduce expectations for an imminent BoE policy easing. A generally positive risk tone has also supported GBP/JPY, offsetting some of the pressure on the yen.
Yen supported by hawkish BOJ expectations
The Japanese Yen remains underpinned by expectations that the Bank of Japan (BoJ) could tighten policy later this year. Geopolitical tensions and trade uncertainties further reinforce JPY demand as a safe-haven asset. This hawkish BoJ outlook, combined with the divergent BoE policy path, may cap GBP/JPY gains in the near term.
Cautious positioning ahead of UK data
Mixed fundamental signals suggest traders exercise caution in chasing further GBP/JPY upside. Focus now turns to the UK macroeconomic releases on Friday, including monthly GDP data, which could provide key momentum for the British Pound and influence the next leg of the cross’s movement.
