GBP/JPY extends the rally to near 194.50 as BoJ keeps interest rate steady

Source Fxstreet
  • GBP/JPY gains momentum to near 194.40 in Wednesday's early European session, adding 0.20% on the day. 
  • BoJ kept interest rates steady amid Trump’s tariff threats. 
  • BoE is likely to keep interest rates on hold at 4.5% on Thursday. 

The GBP/JPY cross extends its upside to 194.40 during the early European session on Wednesday. The (JPY) trades slightly weaker after the Bank of Japan (BoJ) decided to keep its policy rate unchanged at its March meeting on Wednesday. The attention will shift to the Bank of England (BoE) interest rate decision on Thursday.

The BoJ kept interest rates steady on Wednesday, as widely expected. The Japanese central bank noted in the statement that "Concerning risks to the outlook, there remain high uncertainties surrounding Japan’s economy and prices, including the evolving situation regarding trade and other policies in each jurisdiction.”

Market players will closely monitor the press conference by BoJ Governor Kazuo Ueda, which might offer some hints about the interest rate path in Japan. The swaps market is now pricing in nearly 71% chance of a hike by July and certainty by October.

The BoE is expected to keep interest rates on hold on Thursday and stick to its mantra of gradual moves amid the heightened economic uncertainty and mixed news on the UK's economy. The markets anticipate the UK central bank to leave its benchmark interest rate on hold at 4.5%, with the next cut likely in May, followed by further reductions in August and November, according to the majority of economists polled by Reuters last week. 

Policymakers will have to wait until the May meeting to discuss the measures taken by Finance Minister Rachel Reeves on March 26 to defend her fiscal rules, which are now under threat due to weaker-than-expected growth and higher borrowing costs.

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
Ethereum Price Forecast: ETH bounces off $4,100 as whales show resilienceEthereum (ETH) saw a 5% gain on Wednesday as large-scale holders continued accumulating the altcoin despite increased profit-taking from retailers.
Author  FXStreet
Yesterday 01: 40
Ethereum (ETH) saw a 5% gain on Wednesday as large-scale holders continued accumulating the altcoin despite increased profit-taking from retailers.
placeholder
USD/JPY extends its recovery to 147.60 amid generalised Yen weakness The US Dollar accelerated its recovery against a weaker Japanese Yen on Friday.
Author  FXStreet
22 hours ago
The US Dollar accelerated its recovery against a weaker Japanese Yen on Friday.
placeholder
Bitcoin Price Forecast: BTC steadies at $113,500 as traders await Powell’s Jackson Hole speechBitcoin (BTC) steadies around $113,500 at the time of writing on Thursday after falling 3% so far this week.
Author  FXStreet
22 hours ago
Bitcoin (BTC) steadies around $113,500 at the time of writing on Thursday after falling 3% so far this week.
placeholder
Ripple Price Forecast: XRP slips as investors lock in $300M profit ahead of Fed Chair Powell's speechXRP fell 3% to $2.85 on Thursday as investors booked over $300 million in profits following hawkish Federal Open Market Committee (FOMC) minutes from its July meeting.
Author  FXStreet
6 hours ago
XRP fell 3% to $2.85 on Thursday as investors booked over $300 million in profits following hawkish Federal Open Market Committee (FOMC) minutes from its July meeting.
placeholder
Ethereum Price Forecast: ETH risks selloff as supply in profit tops 90% ahead of Powell's speechEthereum's (ETH) large percentage of supply in profit could stir selling activity as hawkish signs continue to grow on Thursday, ahead of Federal Reserve (Fed) Chair Jerome Powell's speech at Jackson Hole.
Author  FXStreet
6 hours ago
Ethereum's (ETH) large percentage of supply in profit could stir selling activity as hawkish signs continue to grow on Thursday, ahead of Federal Reserve (Fed) Chair Jerome Powell's speech at Jackson Hole.
Related Instrument
goTop
quote