GBP/JPY moves away from 18-year peak, hangs above mid-213.00s as traders await BoE

• GBP/JPY snaps a four-day winning streak amid some repositioning ahead of the BoE meeting.
• The BoE is seen leaving rates unchanged, though traders are pricing in more rate cuts in 2026.
• Japan’s Fiscal woes keep the JPY bulls on the sidelines ahead of the February 8 snap election.

The GBP/JPY cross extends the previous day's late pullback from the 215.00 psychological mark, or a fresh high since January 2008, and drifts lower during the Asian session on Thursday. Spot prices, for now, seem to have snapped a four-day winning streak and currently trade around the 213.70 region, down nearly 0.25% for the day, amid some repositioning ahead of the key central bank event.

The Bank of England (BoE) is scheduled to announce its policy decision later today and is widely expected to keep interest rates on hold amid supportive fundamentals. Traders, however, are still pricing in the possibility that the UK central bank will lower borrowing costs at least two more times in 2026. Hence, the market focus will remain glued to MPC vote distribution and the post-meeting press conference, where comments from BoE Governor Andrew Bailey will influence the British Pound (GBP) and provide some meaningful impetus to the GBP/JPY cross.

In the meantime, some follow-through US Dollar (USD) buying is seen weighing on the GBP. The Japanese Yen (JPY), on the other hand, might continue with its relative underperformance amid worries about the country's financial health on the back of Prime Minister Sanae Takaichi's expansionary fiscal plans and political uncertainty ahead of the snap election on February 8. This might hold back traders from placing aggressive bearish bets around the GBP/JPY cross, warranting some caution before confirming that spot prices have topped out in the near term.