Pound Sterling falls to one-month low against surging Japanese Yen
GBP/JPY extends its steep decline on Thursday as the Japanese Yen (JPY) strengthens sharply across the board for the second consecutive day. The cross fell 1.13% on Wednesday and is down around 1.60% at the time of writing, trading near 210.60, its lowest level in a month.
The Japanese Yen (JPY) surged sharply for two days, causing the GBP/JPY pair to plummet to a one-month low of 210.60 on Thursday, its lowest level in a month. Traders are keeping an eye on the 209.58 level set during coordinated intervention in July. The Yen's gains intensified after USD/JPY briefly surpassed the psychologically significant 160 mark, hinting at another possible intervention or rate check.
Japan's top currency diplomat Atsushi Mimura stated that authorities "continue to stand ready on forex" and expressed neither ease nor satisfaction with the current forex market. The Bank of Japan (BoJ) may adopt a more hawkish monetary policy, as suggested by board member Hajime Takata, who called for "a more nimble approach with rate hikes" and a broader range of options beyond the usual 0.25% rate hike.
Traders have priced in a BoJ rate hike at their September 16-17 meeting. Economists at Societe General believe the BoJ tightening pace could increase, along with bond repatriation flows ahead of the fiscal year-end, indicating the Yen may be about to change direction.
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