Risk aversion keeps British Pound under pressure against Yen despite hawkish BoE

• A combination of headwinds leaves GBP/JPY edging down for a second consecutive day.
• Growing expectations of a December BoJ rate rise and risk aversion lend support to the safe-haven JPY.
• USD strength puts pressure on the GBP, although the BoE’s hawkish stance may cushion the decline.

Having reached a two-month high around 23.75 earlier this week, GBP/JPY extends its pullback on Friday as sellers return for a second consecutive day. A combination of factors keeps the cross under pressure through the first half of the European session, with spot prices currently just above the mid-211.00s, nearly 0.35% lower on the day.

Thursday’s release of the Bank of Japan’s (BoJ) September meeting minutes showed agreement among policymakers that further increases in the policy rate and adjustments to the degree of monetary easing remained appropriate. This reinforced expectations of a December rate rise, lending support to the Japanese Yen (JPY) and underscoring the BoJ’s hawkish outlook. Broader risk aversion also favours the JPY’s relative safe-haven appeal. By contrast, the British Pound (GBP) is under pressure as the US Dollar (USD) continues to recover ahead of the crucial US Nonfarm Payrolls report.

Some support for the GBP could come from the Bank of England’s (BoE) hawkish shift: the central bank raised interest rates for the first time in more than three years and indicated that another increase is likely unless the US-Iran war is resolved. Chancellor John Healey’s 2026 Autumn Budget also eased the immediate risk of a runaway fiscal crisis, potentially providing a further cushion for the GBP. Together, these factors could offer GBP/JPY some support, suggesting caution before taking aggressive bearish positions in anticipation of further declines.