British Pound extends gains to fresh monthly peak, around mid-217.00s vs weaker Yen
The GBP/JPY cross catches fresh bids on Tuesday and climbs to its highest level since July 30, around mid-217.00s during the first half of the European session.
The British Pound (GBP) extended gains to a fresh monthly peak around mid-217.00 Japanese Yen (JPY) during the first half of the European session on Tuesday. This rise came as investors remained concerned over Japan's deteriorating fiscal situation due to soaring long-term interest rates, a massive national debt burden, and expansionary budget pressures.
Moreover, supply chain strains stemming from the Middle East conflict and disruptions around the Strait of Hormuz have contributed to the underperformance of the Japanese Yen, bolstering the GBP/JPY cross. The Bank of England's base rate is projected to stay unchanged at 3.75% by the end of 2026, creating a gap of approximately 225-250 basis points between the BoE and BoJ rates.
This might continue to fuel the JPY carry trade, validating a near-term positive outlook for the GBP/JPY cross. Spot prices have also recovered a significant portion of losses driven by a rare US-Japan joint intervention in late July.
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