GBP/JPY holds gains above 212.00 as Takaichi talks down the yen

• USD/JPY hesitates above 212.00, but holds moderate daily gains.
• PM Takaichi's comments praising a weak Yen have sent the JPY lower across the board.
• UK manufacturing sector's activity grew at its fastest pace in 17 monts in January.

The Pound is posting moderate gains against a weaker Japanese Yen, weighed by Prime Minister Takaichi’s comments on Monday. The pair trades right above 212.00 at the time of writing, up from last week’s lows at the 209.60 area, but also below session highs at 212.68.

Japanese Prime Minister rattled markets over the weekend, praising the benefits of a weaker Yen a campaign speech. These comments oppose her finance minister’s efforts to stem speculative JPY sales, which have included severe threats of intervention over the previous weeks. Tokyo has come to the rescue, attempting to contextualise Takaichi’s remarks, but the damage to the Yen seems irreversible for now.

Beyond that, news reports pointing to the possibility of a landslide victory for the ruling LDP are adding pressure on the Japanese currency. Markets are wary that stronger political support will encourage Takaichi to pursue deeper tax cuts and bigger spending, adding strain to the already depleted Japanese government coffers.

In the UK, data released on Monday revealed that the manufacturing sector’s activity grew at a faster-than-expected pace in January. The Final S&P Global Manufacturing PMI has been revised up to 51.8, its best reading since August 2024, from preliminary estimates of 51.6, unchanged from the previous month. The impact of these figures on the Pound, however, has been limited.