- The GBP/JPY wins impulse about 194.40 in the first bars of the European session on Wednesday, adding 0.20% in the day.
- The BOJ maintained stable interest rates amid Trump’s tariff threats.
- The BOE is expected to keep interest rates without changes in 4.5% on Thursday.
The GBP/JPY crossing extends its increase to 194.40 during the first measures of the European session on Wednesday. The (JPY) quotes slightly weaker after the Bank of Japan (Boj) decided to maintain its policy rate without changes in its March meeting on Wednesday. The attention will focus on the decision on the interest rate of the Bank of England (BOE) on Thursday.
The BOJ maintained stable interest rates on Wednesday, as expected. The Japanese Central Bank said in the statement that “in terms of the risks for perspectives, there are still high uncertainties around the economy and prices of Japan, including the situation in evolution regarding trade and other policies in each jurisdiction.”
Market participants will closely follow the press conference of the governor of the BOJ, Kazuo Ueda, which could offer some clues about the trajectory of interest rates in Japan. The Swaps market is now valuing in almost 71% the probability of a rise for July and certainty for October.
The BOE is expected to maintain interest rates without changes on Thursday and adhere to its mantra of gradual movements amid the high economic uncertainty and mixed news about the economy of the United Kingdom. The markets anticipate that the Central Bank of the United Kingdom maintains its reference interest rate by 4.5%, with the next cut in May, followed by more reductions in August and November, according to most economists surveyed by Reuters last week.
Those responsible for the policy will have to wait until the May meeting to discuss the measures taken by the Minister of Finance, Rachel Reeves, on March 26 to defend their fiscal rules, which are now under threat due to the weakest growth of what is expected and the highest cost of indebtedness.
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.
