The GBP/JPY cross remains range-bound near the mid-199.00s during the Asian session on Tuesday, struggling to build on Monday’s rebound from the 199.00 area, a nearly two-week low. Traders are now looking to the upcoming flash UK PMIs for fresh market impetus.
BoJ uncertainty supports GBP/JPY
The Bank of Japan’s (BoJ) unclear path on interest rate hikes continues to weigh on the Japanese Yen (JPY), providing some support for GBP/JPY. Investors are concerned that domestic political uncertainty and economic headwinds from US tariffs could lead the BoJ to delay rate increases further. Meanwhile, a generally positive risk tone in global markets also limits safe-haven demand for the Yen.
Hawkish dissents to last week’s BoJ on-hold decision signal the potential for future rate hikes, with markets pricing in a 25 basis-point move in October. This contrasts with the Bank of England’s (BoE) dovish stance, which signals further reductions in the policy rate and may keep the British Pound (GBP) under relative pressure against the lower-yielding JPY. Geopolitical risks could also act as a moderating factor for GBP/JPY.
Technical and market outlook
Traders may wait for a confirmed follow-through in buying before viewing the recent corrective pullback from the 201.25 region—the highest level since July 2024—as complete. The flash UK PMIs could provide key insights into UK economic health and influence short-term opportunities for GBP/JPY trading.
