British Pound sets new two-month high against Yen as Thursday’s BoE decision approaches

Dip-buying supports GBP/JPY on Wednesday, with the GBP benefiting from stronger expectations of a BoE rate hike.
Further upside in the cross is capped as USD weakness and the prospect of intervention lend support to the JPY.
With Thursday's key BoE meeting approaching, traders also appear reluctant to commit.

Buying interest lifts GBP/JPY to a fresh two-month high in the first half of Wednesday's European session, after the cross recovers from an intraday decline towards 212.00. Trading just below the mid-213.00s, spot prices are currently around 0.20% higher on the day and appear set to extend an uptrend that began a week ago.

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

Expectations of a more hawkish Bank of England (BoE) continue to support the British Pound (GBP), as the threat of persistent inflation maintains pressure on policymakers. A 25-basis-point (bps) rate increase at Thursday's BoE meeting is priced in as a near certainty. The GBP is also benefiting from reduced fiscal concerns after the recent UK budget updates, providing another source of support for the GBP/JPY cross.

Against the British currency, the Japanese Yen (JPY) remains a relative underperformer as uncertainty persists over when the Bank of Japan (BoJ) will next raise rates. Expectations that the authorities could intervene to support the domestic currency are, however, helping to contain further losses. On Monday, Japan's Finance Minister Satsuki Katayama reaffirmed the government's readiness to act against excessive or disorderly JPY weakness.

Broad-based weakness in the US Dollar (USD) is also supporting the JPY and could consequently restrict further upside in GBP/JPY. Ahead of Thursday's crucial BoE policy decision, traders may also prefer to remain on the sidelines rather than take aggressive directional positions. Even so, the fundamental factors outlined above indicate that an upward move remains the path of least resistance for spot prices.

How Has Pound Sterling Performed This Week?

The British Pound (GBP) recorded its strongest performance against the Australian Dollar this week. Its percentage changes against the major currencies listed are shown in the table below.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.82%	-0.71%	0.43%	-0.10%	0.38%	0.08%	-0.95%
EUR	0.82%		0.08%	1.21%	0.69%	1.12%	0.90%	-0.16%
GBP	0.71%	-0.08%		0.96%	0.59%	1.04%	0.80%	-0.23%
JPY	-0.43%	-1.21%	-0.96%		-0.51%	-0.06%	-0.42%	-1.47%
CAD	0.10%	-0.69%	-0.59%	0.51%		0.47%	0.09%	-0.85%
AUD	-0.38%	-1.12%	-1.04%	0.06%	-0.47%		-0.24%	-1.26%
NZD	-0.08%	-0.90%	-0.80%	0.42%	-0.09%	0.24%		-1.09%
CHF	0.95%	0.16%	0.23%	1.47%	0.85%	1.26%	1.09%

Percentage movements between major currencies are presented in the heat map. To read it, select the base currency in the left-hand column and the quote currency in the top row. Selecting the British Pound on the left and following that row across to the US Dollar, for instance, gives the percentage change for GBP (base)/USD (quote) in the corresponding cell.