- The GBP/JPY is vulnerable since a significant increase in the yields of the United Kingdom bonds has weighed over the sterling pound.
- The yields of the United Kingdom bonds shot after Chancellor Reeves presented a new well -being bill.
- BOE Taylor foresees five interest rate cuts this year.
The GBP/JPY torque quotes with caution about 196.00 during Thursday’s Asian session after reaching a new weekly minimum around 195.40 the day before. The cross faces a strong sales pressure since the sterling pound (GBP) runs below the expected due to an abrupt increase in the performance of the United Kingdom bonds, after the speculation about the future of Rachel Reeves as Treasury Chancellor.
The yields of the United Kingdom Gilts at 10 years fired almost 4% to about 4.61% on Wednesday after Foreign Minister Reeves presented a new welfare scheme in the House of the Commons on Tuesday.
Conservative members opposed Rachel’s well -being bill since it contradicted their fiscal rules, which it promised to reduce the growing fiscal deficit of the United Kingdom.
The speculation about Rachel’s resignation arose after the United Kingdom Prime Minister Keir Starmer avoids the conservative leader KEMI Badenoch when she asked about Rachel’s survival. However, Starmer supported Rachel later, since a Downing Street spokesman said in her name that “she is not going anywhere.”
Meanwhile, support for higher interest rates cuts by the member of the Monetary Policy Committee (MPC) of the Bank of England (BOE), Alan Taylor, at the top of the European Central Bank (ECB) has also weighed on the sterling pound. Taylor anticipated five interest rate cuts and saw the neutral nominal rate in around 2.75 to 3 percent by the end of the year.
Japanese – frequent questions
The Japanese Yen (JPY) is one of the most negotiated currencies in the world. Its value is determined in general by the march of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of the Japanese and American bonds or the feeling of risk among the operators, among other factors.
One of the mandates of the Bank of Japan is the currency control, so its movements are key to the YEN. The BOJ has intervened directly in the currency markets sometimes, generally to lower the value of YEN, although it abstains often due to the political concerns of its main commercial partners. The current ultralaxy monetary policy of the BOJ, based on mass stimuli to the economy, has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to fight against inflation levels of decades.
The position of the Bank of Japan to maintain an ultralaxa monetary policy has caused an increase in political divergence with other central banks, particularly with the US Federal Reserve. This favors the expansion of the differential between the American and Japanese bonds to 10 years, which favors the dollar against Yen.
The Japanese Yen is usually considered a safe shelter investment. This means that in times of tension in markets, investors are more likely to put their money in the Japanese currency due to their supposed reliability and stability. In turbulent times, the Yen is likely to be revalued in front of other currencies in which it is considered more risky to invest.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
