British Pound loses ground against Japanese Yen ahead of central bank decisions
- GBP/JPY slips as broad Pound weakness offsets subdued Japanese Yen demand.
- The British Pound loses ground as traders reduce exposure before the BoE monetary policy decision.
- Markets expect both the BoE and BoJ to keep interest rates unchanged this week.
GBP/JPY edges lower on Monday as the British Pound (GBP) weakens across the board following its recent advance, with traders trimming exposure ahead of the Bank of England’s (BoE) interest rate decision on Thursday. At the time of writing, the cross trades around 217.84, down 0.23% on the day.
Sterling also faces pressure from lower UK government bond yields after Oil prices opened the week sharply lower. The temporary pause in attacks between the United States (US) and Iran has eased near-term inflation concerns, reducing expectations that the BoE will need to tighten policy aggressively.
The BoE is widely expected to leave its benchmark interest rate unchanged at 3.75%. So far, the recent energy shock has had only a limited impact on UK inflation, with the Consumer Price Index (CPI) falling to a 15-month low of 2.6% in June.
However, upside risks to inflation have not disappeared. The decline in Oil prices could prove short-lived in the absence of concrete negotiations between Washington and Tehran, while energy supplies through the Strait of Hormuz remain heavily disrupted.
ING analyst Francesco Pesole said, “If inflation is still expected to remain contained, we believe the BoE will leave rates unchanged for the rest of the year.”
“With markets pricing 38 [bps] of tightening by year-end, dovish repricing remains, in our view, the clearest near-term risk for sterling,” Pesole added.
Concerns over the UK’s fiscal outlook also weigh on the Pound. Prime Minister Andy Burnham has signaled plans for higher spending on defence, social care and housing, leaving investors questioning whether the measures will require additional borrowing or tax increases.
However, the downside in GBP/JPY remains limited as the Japanese Yen (JPY) stays structurally weak. Japan’s low interest rates and reliance on imported energy continue to weigh on the currency, with Oil prices still elevated despite Monday’s decline.
The Bank of Japan (BoJ) also announces its interest rate decision on Friday and is widely expected to keep its policy rate unchanged at 1%.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | 0.13% | -0.11% | 0.10% | -0.21% | 0.01% | -0.33% | |
| EUR | 0.11% | 0.20% | 0.00% | 0.22% | -0.11% | 0.14% | -0.24% | |
| GBP | -0.13% | -0.20% | -0.20% | -0.01% | -0.30% | -0.10% | -0.44% | |
| JPY | 0.11% | 0.00% | 0.20% | 0.17% | -0.11% | 0.10% | -0.22% | |
| CAD | -0.10% | -0.22% | 0.01% | -0.17% | -0.29% | -0.07% | -0.41% | |
| AUD | 0.21% | 0.11% | 0.30% | 0.11% | 0.29% | 0.24% | -0.14% | |
| NZD | -0.01% | -0.14% | 0.10% | -0.10% | 0.07% | -0.24% | -0.37% | |
| CHF | 0.33% | 0.24% | 0.44% | 0.22% | 0.41% | 0.14% | 0.37% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).