GBP/JPY surrenders modest gains, trades below 212.00 ahead of BoJ presser/BoE decision

• GBP/JPY attracts some intraday sellers following the Asian session uptick to the 212.35 area.
• Heightened geopolitical uncertainties benefit the safe-haven JPY and cap gains for spot prices.
• Traders now look to BoJ’s post-meeting presser for some impetus ahead of the BoE decision.

The GBP/JPY cross struggles to capitalize on its modest Asian session gains to the 212.35 area on Thursday and retreats to the lower end of its daily range in the last hour. Spot prices currently trade around the 211.85-211.80 region, nearly unchanged for the day, as traders keenly await the Bank of England (BoE) policy update before placing directional bets.

Investors ditched bets that the UK central bank would cut interest rates twice this year, instead are pricing in a greater chance of a hike in November on the back of the Middle East conflict-driven energy shock. Hence, the market focus will remain glued to the accompanying monetary policy statement. Apart from this, the monthly UK employment details should influence the British Pound (GBP) and provide some meaningful impetus to the GBP/JPY cross.

In the meantime, the Bank of Japan (BoJ left interest rates unchanged at the end of the March policy meeting earlier today amid worries that the war-driven surge in Crude Oil prices could weaken economic growth. However, escalating geopolitical tensions benefit the safe-haven Japanese Yen (JPY) and cap the GBP/JPY cross. Traders now look to BoJ Governor Kazuo Ueda’s comments during the post-meeting press conference for cues on the policy outlook.

Nevertheless, market participants seem convinced that the BoJ will stick to its policy normalization path. This, along with fears that Japanese authorities might step in to stem further weakness in the domestic currency, could support the JPY and cap the GBP/JPY cross. Meanwhile, the mixed fundamental backdrop and the range-bound price action since the beginning of this week warrant some caution for aggressive traders or positioning for a firm near-term direction.