British Pound rebounds swiftly from one-month low against broadly weaker Yen
The GBP/JPY cross stages a goodish intraday recovery from the vicinity of the 210.00 psychological mark, though it remains on track to register heavy weekly losses.
The British Pound (GBP) witnessed a swift rebound from a one-month low against the Japanese Yen (JPY) following an intraday recovery from the 210.00 level. The GBP/JPY cross climbed to the 211.80 area in the early European session on Friday, marking a break from a two-day losing streak. Investors are pricing in a more hawkish stance from the Bank of Japan (BoJ), leading to some selling of the JPY due to concerns over worsening fiscal conditions in Japan.
The Japanese government's initial general-account budget requests are projected to reach ¥143 trillion, a record high for the fourth consecutive year. Prime Minister Sanae Takaichi's ambitious investment strategy, however, raises doubts about her ability to balance fiscal responsibility, potentially triggering short-covering moves around the GBP/JPY cross.
Meanwhile, Japan plans to keep borrowing costs significantly lower than those of other major economies, even with expectations of a faster BoJ policy tightening. Consequently, the JPY carry trade remains active. The GBP's rise can be attributed to follow-through buying, while expectations of a delayed interest rate hike at the Bank of England's (BoE) September meeting may cap the GBP.
Traders are advised to wait for strong follow-through buying to confirm if the GBP/JPY cross has truly bottomed out.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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