- The GBP/JPY is in positive territory around 199.20 in the early hours of the European session on Tuesday.
- The main commercial negotiator of Japan said he had a phone call with the US Secretary of Commerce.
- Concerns about the fiscal risks of the United Kingdom could limit the gBP bullish potential.
The GBP/JPY crossing gains impulse around 199.20 during the early European session on Tuesday. The Japanese Yen (JPY) weakens in front of the sterling pound (GBP) due to commercial concerns after the US president Donald Trump reiterated that he plans to impose 25% tariffs on Japan’s assets.
Trump said Monday night that he plans to impose 25% tariffs on Japan’s assets in the last development of his chaotic commercial war. The main commercial negotiator of Japan, Ryosei Akazawa, said Tuesday that he had a phone call with the US Secretary of Commerce Howard Lutnick for 40 minutes, adding that he agreed to actively participate in commercial negotiations.
However, Japanese officials continued to defend what he needed to be defended. Akazawa also declared that the automotive sector is the core of the Japanese economy and cannot tolerate a 25% tariff on cars, since car parts are causing enormous losses to Japanese companies. Uncertainty about tariffs will probably undermine Japanese and create a favorable wind for short -term crossing.
On the other hand, the new climbing in the tax risks of the United Kingdom could limit the bullish potential of the sterling pound. Last week, the United Kingdom Chancellor Rachel Reeves violated her own tax rules by increasing the standard allocation for universal credit, which is estimated to increase the financial burden by £ 4.8 billion for fiscal year 2029-2030. According to a Barclays analysis, it is very likely that the United Kingdom government needs to increase taxes in the autumn budget to address the growing budgetary concerns.
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.
