British Pound weakens against Japanese Yen as BoE leaves rates unchanged
GBP/JPY trades under pressure on Thursday as the British Pound weakens across the board following the Bank of England’s (BoE) latest monetary policy announcement. At the time of writing, the cross trades around 208.23, down 0.40% on the day.
British Pound (GBP) experienced a brief decline against the Euro (EUR) following the Bank of England's (BoE) decision to hold its interest rates steady. FX strategist Howard Du of TD Securities suggests that the market's disappointment in the BoE's lack of a more hawkish stance could pave the way for GBP to break above 0.86 in the coming weeks.
The UK's fiscal and political risk premiums, coupled with a comparatively less hawkish BoE compared to the European Central Bank (ECB), should provide support for this upward movement. Despite inflationary pressures, MPC members remain cautious about their impact and second-round effects. The GBP initially weakened after the BoE rate decision, aligning with the strategy outlined in the BoE Preview report.
The market was already pricing in a potential November BoE rate hike before the meeting, and the absence of a significant shift in the BoE's guidance or vote split was viewed as a letdown. The strategy remains bullish on EUR/GBP, anticipating a breakout above 0.86 in forthcoming weeks, leveraging the UK's fiscal and political risk premium build-up heading into the Autumn Budget.
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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