GBP/JPY experienced a downward movement after initially gaining during the Asian session on Monday. Reports suggest that the Japanese authorities may have intervened to support the Japanese Yen, leading to the currency’s intraday strength. The Bank of Japan’s decision to keep its policy settings unchanged last Friday initially pressured the JPY, but overall market optimism has lessened its safe-haven appeal. This has supported the GBP/JPY cross, with expectations of a continued interest rate gap between Japan and other nations favoring further depreciation of the JPY.
In the UK, the Pound Sterling has strengthened as market expectations point to the Bank of England delaying any borrowing cost reductions until the next quarter. Bank of England Chief Economist Huw Pill stated that interest rate cuts are not imminent, citing persistent inflationary pressures and strong domestic Purchasing Managers Index (PMI) figures as reasons for postponing any rate adjustments.