British Pound dives to six-month low vs rallying Yen amid bets for faster BoJ rate hikes
The GBP/JPY cross meets with heavy supply during the early part of the European session on Monday and weakens below the 209.00 mark, hitting its lowest level since February 24 amid a broad-based rally in the Japanese Yen (JPY).
The British Pound experienced a significant drop to a six-month low against the Japanese Yen on Monday, breaching the 209.00 mark and reaching its lowest point since February 24. This decline occurred amid a strong rally in the Yen, driven by expectations of a faster pace of interest rate hikes by the Bank of Japan. Traders had fully priced in a 25 basis point hike at the upcoming BoJ meeting on September 17-18, and some analysts believed a larger hike could help curb inflation expectations and support the Yen.
Additionally, there were reports of potential Japanese currency market intervention, further boosting the Yen and exerting downward pressure on the GBP/JPY cross. The recent decline may also be attributed to technical selling following a break below the 210.00 psychological level. However, concerns about Japan's fiscal outlook could limit further Yen gains.
Meanwhile, the British Pound benefited from a weaker US Dollar, which helped keep the downside for the GBP/JPY cross in check. Despite the fundamental backdrop and technical breakdown, the next move is likely to see any recovery attempts viewed as selling opportunities.
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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