British Pound hits one-month high against Japanese Yen

• GBP/JPY rises for a third straight day as the British Pound benefits from Euro weakness.
• Growing expectations of a BoE interest rate hike provide further support to Sterling.
• Hawkish BoJ remarks offer limited relief to the Japanese Yen as fiscal concerns persist.

GBP/JPY edges higher on Monday, extending its advance for a third consecutive day as the British Pound (GBP) benefits from weakness in the Euro (EUR), while the Japanese Yen (JPY) struggles against most of its major peers despite hawkish signals from the Bank of Japan (BoJ). At the time of writing, the cross trades around 211, its highest level since September 18.

More than 2,000 people were arrested across France after protests over rising living costs and deteriorating public services descended into riots and looting over the weekend. The unrest weighs on the Euro, with EUR/GBP trading around 0.8415, its lowest level since June 2025.

Strategists at DBS argue that the Pound is emerging as a compelling choice versus the single currency, noting that “GBP could offer a more attractive alternative to the EUR.” They point out that, beyond a “more favourable carry,” sterling is underpinned by the IMF’s upgraded UK growth forecast and “praise for taking steps to reduce debt and the deficit.”

According to DBS, Chancellor John Healey’s commitment to fiscal discipline ahead of the October 28 Autumn Budget has “helped to contain concerns about a repeat of the 2022 mid-budget crisis.”

Growing expectations that the Bank of England (BoE) could raise interest rates before the end of the year provide additional support to Sterling. Traders now turn their attention to a busy UK economic calendar, including employment figures on Tuesday, inflation data on Wednesday and Retail Sales on Friday. These releases could shape expectations ahead of the BoE’s November 5 monetary policy meeting. A Reuters poll published last week showed that 54 of 63 economists expect the central bank to raise its policy rate by 25 basis points (bps).

Meanwhile, hawkish remarks from the Bank of Japan provide little support to the Japanese Yen, which remains structurally weak due to Japan’s relatively low interest rates and concerns over the country’s heavy government debt burden.

BoJ Governor Kazuo Ueda said that “underlying inflation is near the 2% target.” He also warned that “if the policy rate isn’t adjusted properly, market concerns about inflation risks could raise long-term rates,” keeping the possibility of further monetary tightening on the table.

Japanese Prime Minister Sanae Takaichi said that “building a robust economy can boost market confidence in the Yen” and that the government “plans to maintain the issuance of Japanese government bonds at an appropriate level.” On the possibility of additional fiscal measures, Takaichi said she has “no preset idea on whether the government will compile an extra budget.”