Around 212.00: British Pound holds near two-month high against Yen as bulls await Thursday’s BoE

Sterling strength keeps GBP/JPY on a positive footing on Tuesday.
With intervention risks deterring JPY bears, further gains in the cross remain constrained.
Ahead of Thursday’s pivotal BoE policy announcement, traders also appear reluctant to commit.

212.00 remains the key threshold for GBP/JPY bulls. The cross is trading close to a two-month high in Tuesday’s early European session, but buyers are waiting for sustained strength and acceptance above that level before positioning for additional upside.

Easing fiscal worries after the recent UK budget updates continue to support the British Pound’s (GBP) relative outperformance. Sterling also benefits from growing conviction that the Bank of England (BoE) will raise interest rates on Thursday. By contrast, uncertainty surrounding the timing of the Bank of Japan’s (BoJ) next rate increase keeps the Japanese Yen (JPY) under pressure. The resulting wide UK-Japan interest rate differential provides further support for GBP/JPY.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

UK Autumn Budget Preserves BoE Rate Expectations, Supporting Pound

DBS strategists point to Sterling’s relative resilience after the October 28 UK Autumn Budget, which they say "did not unsettle the gilt market and market pricing for an interest rate hike at the November 5 Bank of England meeting." They consequently anticipate a stronger hawkish bias among policymakers. Following the "6-3 vote supporting the September 17 pause, the vote split will likely be 7-2 this Thursday, with more MPC members acknowledging growing inflation risks." This expected change in the BoE vote split is viewed as strengthening GBP’s appeal against the Euro.

Speculation about renewed Japanese intervention to support the domestic currency is also keeping traders alert. On Monday, Japan’s Finance Minister Satsuki Katayama said the joint FX statement with the US remains in place and that the government stands ready to counter excessive or disorderly JPY weakness. Such risks could discourage aggressive positioning and limit GBP/JPY gains. Attention remains firmly on the key central bank event: Thursday’s highly anticipated BoE monetary policy decision.

Even so, the fundamental backdrop outlined above appears to favour buyers. Any corrective decline is therefore more likely to attract buying interest and prove limited. Confirmation of the positive near-term outlook still requires strong follow-through buying, which would open the way for GBP/JPY to extend its advance of the past month or so.

7 Days: Pound Sterling Performance

Over the last 7 days, the British Pound (GBP) recorded its strongest performance against the New Zealand Dollar. The table below sets out GBP’s percentage changes against the major currencies listed.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.18%	-0.53%	0.28%	-0.36%	0.64%	1.23%	-1.29%
EUR	0.18%		-0.38%	0.46%	-0.19%	0.84%	1.44%	-1.10%
GBP	0.53%	0.38%		0.83%	0.22%	1.21%	1.82%	-0.73%
JPY	-0.28%	-0.46%	-0.83%		-0.63%	0.40%	0.97%	-1.46%
CAD	0.36%	0.19%	-0.22%	0.63%		0.99%	1.61%	-0.95%
AUD	-0.64%	-0.84%	-1.21%	-0.40%	-0.99%		0.61%	-1.93%
NZD	-1.23%	-1.44%	-1.82%	-0.97%	-1.61%	-0.61%		-2.49%
CHF	1.29%	1.10%	0.73%	1.46%	0.95%	1.93%	2.49%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For instance, choosing the British Pound on the left and following its row across to the US Dollar gives the percentage change for GBP (base)/USD (quote) in the corresponding cell.