The GBP/JPY pair saw a decline as Japan’s Finance Minister Suzuki hinted at taking measures to address excessive currency volatility. This led to the currency pair trading around 198.70 during the European trading session on Friday.
Minister Suzuki emphasized the importance of intervening in the foreign exchange market when necessary to maintain market trust in public finances. He also mentioned that there is no limit to the funds available for such interventions.
On the other hand, Japan’s foreign exchange reserves dropped to $1,231 billion in May, the lowest level since February 2023. This decline was attributed to the government’s efforts to defend the Japanese Yen through foreign exchange operations.
In the UK, Halifax House Prices showed a 1.5% increase year-on-year in May, surpassing expectations. However, concerns remain about the employment data for the February-April period, which will be released soon. The UK has seen a decline in the number of employed individuals for three consecutive periods, raising fears of potential rate cuts by the Bank of England.
Despite a drop in UK annual headline inflation to 2.3% in April, the BoE remains cautious about the slow progress in the disinflation process in the services sector. This has reduced the likelihood of multiple rate cuts by the central bank this year.