The British Pound (GBP) remained resilient against the Japanese Yen (JPY) on Friday, with GBP/JPY hovering near 208.64, close to its highest level since August 2008 and on track for a fifth consecutive weekly gain. The Yen continues to struggle despite rising expectations of a Bank of Japan (BoJ) rate hike next week.
Sterling holds firm despite weak UK GDP
In the United Kingdom, weaker-than-expected growth data did little to dent Sterling’s strength versus the Yen. October GDP contracted by 0.1% month-on-month, missing forecasts for a 0.1% expansion and matching September’s decline. The Pound, however, softened slightly against other major currencies, leaving GBP/JPY largely unaffected.
Market eyes BoE rate decision
Traders are turning their attention to the Bank of England’s (BoE) interest rate decision on December 18, with markets widely pricing in a 25 basis point cut. Investors currently assign nearly 90% probability to a reduction in the policy rate to 3.75%, keeping Sterling under close watch ahead of the announcement.
Yen response muted amid BoJ uncertainty
In Japan, the Yen’s subdued reaction reflects skepticism over the BoJ’s willingness to tighten aggressively. Bloomberg reported that officials view next week’s meeting as the start of a broader tightening cycle. Policymakers are reportedly considering raising rates above 0.75% before the current cycle concludes.
A Reuters poll shows roughly 90% of economists expect the BoJ to lift its policy rate to 0.75% at the December 19 meeting, with more than two-thirds projecting further increases to at least 1.00% by the end of next year. However, Reuters also reported that the BoJ is cautious about locking markets into a predefined tightening path, with no plans to update the neutral interest rate or use it as a signal for the pace of future hikes.
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