British Pound hits fresh two-month high vs Yen ahead of BoE decision on Thursday
The GBP/JPY cross reverses an intraday dip to the 212.00 neighborhood, hitting a fresh two-month high during the first half of the European session on Wednesday. Spot prices currently trade just below mid-213.00s, up around 0.20% for the day, and seem poised to prolong a one-week-old uptrend.
The British Pound (GBP) reached a fresh two-month high against the Japanese Yen (JPY) on Wednesday, despite a brief decline earlier in the day. The GBP/JPY cross surged to just below mid-213.00, marking a 0.20% increase for the day. This upward trend is driven by expectations that the Bank of England (BoE) will adopt a more hawkish stance due to persistent inflation, leading to a likely 25-basis-point rate hike on Thursday.
Additionally, easing fiscal concerns following the UK budget updates have bolstered GBP, further supporting the GBP/JPY cross. Meanwhile, the JPY has underperformed relative to the GBP amid uncertainty over the next Bank of Japan (BoJ) rate hike. However, the possibility of government intervention to stabilize the JPY has helped prevent more severe losses.
Meanwhile, the US Dollar (USD) weakened, benefiting the JPY and potentially limiting gains for the GBP/JPY cross. Traders are cautious ahead of the BoE decision, with some opting to stay on the sidelines. Despite this, the overall positive fundamental outlook indicates that GBP's upward momentum is likely to continue.
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