- The GBP/JPY faces pressure about 196.00, with investors waiting for the result of the monetary policy of the BOJ and the BOE.
- It is expected that both the Boj and the BOE will maintain interest rates at their current levels.
- Investors will also focus on the UK CPI data for May, which will be published on Wednesday.
The GBP/JPY torque struggles to extend its rise above 196.00 in the last three negotiation sessions. During the Asian negotiation hours of Monday, the crossing has faced pressure about 196.00 again and has dropped to about 195.50.
It seems that the crossing will take a decisive breakdown anywhere after the monetary policy of the Bank of Japan (BOJ) and the Bank of England (BOE) on Tuesday and Thursday, respectively.
On Tuesday, the BOJ is expected to maintain stable interest rates at 0.5% since officials need to be convinced that underlying inflation will return around 2% before supporting greater hardening of politics. BOJ officials have warned that the tariff policy of the president of the United States (USA), Donald Trump, could impact their economic growth.
A Reuters survey in the period from June 2 to 10 showed that none of the economists expected the Japanese Central Bank to increase its key interest rate in the Monetary Policy announcement of June 17. The survey also showed that a slight majority of economists expects the BOJ to maintain stable interest rates at 0.5% by the end of the year and rise in early 2026.
Meanwhile, the Bank of England (BOE) is expected to also maintain stable interest rates at 4.25% on Thursday, since officials guided a “gradual and careful” monetary expansion approach at the last policy meeting, after a reduction of 25 basic points (PBS) at the rate. Investors doubt that the BOE maintains a moderation guide in the relief of politics due to the slow growth of the labor market and a faster economic contraction than projected in April.
Before the BOE policy, investors will also focus on consumer price index (CPI) of the United Kingdom for May, which are scheduled to be published on Wednesday.
And in Japanese faqs
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.
