The GBP/JPY pair reclaimed the key 200.00 mark during Tuesday’s Asian session, supported by broad Japanese Yen (JPY) underperformance as doubts grow over the Bank of Japan’s (BoJ) next policy move.
Concerns about Japan’s domestic economy continue to weigh on expectations for further BoJ tightening. Last week, policymaker Junko Nakagawa cautioned that “many uncertainties remain,” noting that U.S. tariff measures are dampening Japan’s business and household sentiment.
At the same time, BoJ Deputy Governor Ryozo Himino struck a hawkish tone earlier today, arguing that inflation remains well above target and that it is “appropriate to continue raising interest rates in line with improvements in prices and the economy.”
Looking ahead, the next potential catalyst for the Yen will be U.S.-Japan trade negotiations. However, Japan’s trade negotiator Ryosei Akazawa has not yet confirmed a new schedule for talks after cancelling a planned Washington trip last week, which was set to finalize Tokyo’s $550 billion investment pledge in exchange for tariff relief.
On the UK side, Sterling is holding firm in a quiet economic calendar. Traders now focus on the Bank of England’s September 18 policy decision, with expectations leaning toward steady rates as inflation risks remain tilted to the upside.
