- GBP/JPY is rising to near 198.80 as the BoJ gave no timetable for raising interest rates after holding them steady at 0.25%.
- The BoJ is concerned about possible risks from the US protectionist policies coming in under the leadership of Donald Trump.
- Investors are awaiting BoE policy in which the central bank is expected to leave interest rates unchanged at 4.75%.
The GBP/JPY pair is rallying near 198.80 in the European session on Thursday. The cross will strengthen following the Bank of Japan's (BoJ) monetary policy announcement in which the central bank left interest rates unchanged at 0.25%, as expected. Eight members of the Monetary Policy Committee (MPC) supported keeping interest rates steady, while policymaker Naoki Tamura, a known policy hawk, suggested raising them by 25 basis points (bps) to 0.5%.
BoJ Governor Kazuo Ueda admitted that policies coming in from the President of the United States (US) Donald Trump when he takes office could be a threat to Japan's economic outlook. Ueda kept doors open for an interest rate hike in 2025 as he said, “If the economy and prices move in line with our forecast, we will continue to raise our policy rate”. He stopped short of promising a timetable for policy change.
Investors brace for more volatility in the Japanese Yen (JPY) as National Consumer Price Index (CPI) data for November is set to be released on Friday. The inflation report is expected to show that the National CPI, excluding fresh food, accelerated to 2.6% from 2.3% in October.
Meanwhile, the Pound Sterling (GBP) performs strongly against most peers ahead of the Bank of England's (BoE) interest rate decision at 12:00 GMT. The BoE is widely expected to opt to leave interest rates at 4.75%. Therefore, investors will focus more on the BoE's guidance on interest rates for 2025.
Out of the nine-member Monetary Policy Committee (MPC), only policymaker Swati Dhingra is expected to recommend cutting interest rates by 25 bps.
Source: https://www.fxstreet.com/news/gbp-jpy-soars-to-near-19880-as-boj-holds-rates-steady-boe-policy-eyed-202412191006
