The GBP/JPY currency pair has experienced selling pressure for the second consecutive day, largely influenced by a strengthening Japanese Yen (JPY) following the Bank of Japan’s (BoJ) recent monetary policy decisions. Despite reaching a three-month high near the 199.80 level, the pair has since slipped below the 198.00 level, continuing to trade within a well-established range since the beginning of the week.
In its latest meeting, the BoJ opted to maintain its existing monetary policy, a decision largely anticipated by the market. This pause comes amid political uncertainty triggered by Japan’s recent snap elections. The central bank indicated that it stands ready to adjust interest rates based on economic performance and inflation trends. Simultaneously, concerns over potential government interventions and heightened wariness ahead of the upcoming US presidential election on November 5 contributed to a flow of capital into the JPY, placing additional pressure on the GBP/JPY pair.
Conversely, the British Pound (GBP) faces its own challenges, particularly from the strengthening of the US Dollar (USD), as some traders engage in dip-buying. In this context, the uncertainty surrounding the BoJ’s future rate hikes and a diminishing likelihood of further aggressive rate cuts by the Bank of England (BoE) may provide some level of support for the GBP/JPY cross. This sets a cautious tone for bearish traders who are evaluating whether the recent peaks represent a definitive top for the currency pair in the short term.
Looking ahead, traders are keenly awaiting the post-meeting press conference, where insights from BoJ Governor Kazuo Ueda are anticipated to impact the JPY positively. This event is particularly critical in the absence of significant macroeconomic reports from the UK, as it will likely provide direction for the GBP/JPY pair in the near term.
