GBP/JPY corrects to near 211.30 as BoJ’s Ueda keeps rate hikes on table
- GBP/JPY retraces to near 211.30 after a two-day upside move as the Yen regains ground.
- BoJ’s Ueda keeps the hopes for interest rate hikes on the table.
- The BoE is expected to deliver an interest rate cut in March.
The GBP/JPY pair is down 0.3% to near 211.30 during the early European trading session on Thursday. The pair corrects after a sharp upside move in the last two trading days as Bank of Japan (BoJ) Governor Kazuo Ueda has kept the door open for further interest rate hikes in the near term.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | -0.04% | -0.30% | -0.10% | -0.19% | -0.19% | -0.13% | |
| EUR | 0.11% | 0.07% | -0.17% | 0.02% | -0.08% | -0.07% | -0.02% | |
| GBP | 0.04% | -0.07% | -0.21% | -0.05% | -0.15% | -0.14% | -0.09% | |
| JPY | 0.30% | 0.17% | 0.21% | 0.18% | 0.10% | 0.08% | 0.16% | |
| CAD | 0.10% | -0.02% | 0.05% | -0.18% | -0.09% | -0.09% | -0.04% | |
| AUD | 0.19% | 0.08% | 0.15% | -0.10% | 0.09% | 0.00% | 0.06% | |
| NZD | 0.19% | 0.07% | 0.14% | -0.08% | 0.09% | -0.00% | 0.05% | |
| CHF | 0.13% | 0.02% | 0.09% | -0.16% | 0.04% | -0.06% | -0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
BoJ’s Ueda said in an interview with Yomiuri newspaper on Tuesday that the central bank will scrutinize available data in the March and April policy meetings and then will decide on hiking interest rates during the year. Ueda reiterated, “Our basic stance is to continue raising interest rates if the likelihood of our economic, price forecasts materialising heightens.”
However, market participants doubt that BoJ’s interest rate hikes will come anytime soon, as a report from the Mainichi daily on Tuesday signaled that Japan's Prime Minister (PM) Sanae Takaichi is not in favor of BoJ’s plans of raising interest rates further. The report showed a glimpse of the meeting between Takaichi and BoJ’s Ueda, which took place on February 16.
Above that, the nomination of two members, Toichiro Asada and Ayano Sato, for the central bank's nine-member board, at times when Takaichi’s comments have reflected a contrary preference for the monetary policy outlook, has also raised concerns over the BoJ’s hawkish prospects. Such a scenario is broadly unfavorable for the Japanese Yen (JPY).
Meanwhile, the Pound Sterling (GBP) trades broadly stable even as traders are confident that the Bank of England (BoE) will cut interest rates in the policy meeting in March. Dovish BoE prospects are prompted by weakening United Kingdom (UK) job market conditions and cooling inflationary pressures.
Earlier this week, BoE Monetary Policy Committee (MPC) member Alan Taylor advocated for two to three interest rate cuts in the near term, citing downside employment risks and easing price pressures.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
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