GBP/JPY struggles to break above 196.00 ahead of BoJ-BoE monetary policy

Source Fxstreet
  • GBP/JPY faces pressure near 196.00, with investors awaiting the BoJ-BoE monetary policy outcome.
  • Both the BoJ and the BoE are expected to leave interest rates at their current levels.
  • Investors will also focus on the UK CPI data for May, which will be released on Wednesday.

The GBP/JPY pair struggles to extend its upside above 196.00 from the last three trading sessions. During Asian trading hours on Monday, the cross has faced pressure near 196.00 again and has ticked down to near 195.50.

It seems that the cross will take a decisive break on either side after monetary policy announcements by the Bank of Japan (BoJ) and the Bank of England (BoE) on Tuesday and Thursday, respectively.

On Tuesday, the BoJ is expected to leave interest rates steady at 0.5% as officials need to be convinced that the underlying inflation will return around 2% before supporting further policy-tightening. BoJ officials have warned that the tariff policy by United States (US) President Donald Trump could impact its economic growth.

A Reuters poll in the June 2-10 period showed that none of the economists expected the Japanese central bank to raise its key borrowing rate in the monetary policy announcement on June 17. The survey also showed that a slight majority of economists expect the BoJ to keep interest rates steady at 0.5% by the year-end and hike in early 2026.

Meanwhile, the Bank of England (BoE) is also expected to keep interest rates steady at 4.25% on Thursday, as officials guided a “gradual and careful” monetary expansion approach in the last policy meeting, following a 25-basis-point (bps) rate reduction. Investors doubt that the BoE will maintain a moderate policy-easing guidance due to slowing labor market growth and faster-than-projected economic contraction in April.

Ahead of the BoE policy, investors will also focus on the United Kingdom (UK) Consumer Price Index (CPI) data for May, which is scheduled to release on Wednesday.

Japanese Yen FAQs

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Bitcoin Must Clear This Critical Cost Basis Level For Continued Upside, Analyst SaysIn a recent CryptoQuant Quicktake post, contributor Crazzyblockk highlighted key Bitcoin (BTC) cost basis zones that the leading cryptocurrency must clear – or avoid breaking below – to
Author  NewsBTC
4 Month 23 Day Wed
In a recent CryptoQuant Quicktake post, contributor Crazzyblockk highlighted key Bitcoin (BTC) cost basis zones that the leading cryptocurrency must clear – or avoid breaking below – to
placeholder
Ethereum Price Action Turns Bearish — Risk of Near-Term CorrectionEthereum price started a fresh increase above the $2,450 zone. ETH is now correcting gains from $2,520 and might slip to test the $2,320 zone. Ethereum started a fresh upward move above the $2,350
Author  NewsBTC
6 Month 27 Day Fri
Ethereum price started a fresh increase above the $2,450 zone. ETH is now correcting gains from $2,520 and might slip to test the $2,320 zone. Ethereum started a fresh upward move above the $2,350
placeholder
Bitcoin Price Surges Toward $110K — Will It Finally Stick the Landing?Bitcoin price started a fresh increase from the $105,200 zone. BTC is now consolidating and might struggle to continue higher above the $110,000 resistance. Bitcoin started a fresh increase above the
Author  NewsBTC
7 Month 03 Day Thu
Bitcoin price started a fresh increase from the $105,200 zone. BTC is now consolidating and might struggle to continue higher above the $110,000 resistance. Bitcoin started a fresh increase above the
placeholder
Solana (SOL) Cools After Recovery — Resistance Proving Difficult to CrackSolana started a recovery wave above the $150 zone. SOL price is now correcting gains and might struggle to rise above the $155 resistance. SOL price started a fresh decline after it failed to clear
Author  NewsBTC
7 Month 04 Day Fri
Solana started a recovery wave above the $150 zone. SOL price is now correcting gains and might struggle to rise above the $155 resistance. SOL price started a fresh decline after it failed to clear
placeholder
XRP Could Hit $50 If Ripple Gets Bank License, Claims Crypto PunditVincent Van Code, a software engineer and long-time XRP advocate, ignited fresh debate across the crypto community by outlining what he believes to be the transformative implications of Ripple’s
Author  NewsBTC
7 Month 04 Day Fri
Vincent Van Code, a software engineer and long-time XRP advocate, ignited fresh debate across the crypto community by outlining what he believes to be the transformative implications of Ripple’s
Related Instrument
goTop
quote