English
GBP/JPY Advances Beyond 161.00 on Firmer Rates, Discussions of UK Tax Cuts, and a Focus on BoE
Despite retreating from intraday high, GBP/JPY maintains two-week advance. Yields on US Treasury bonds recover despite market jitters ahead of this week's big data/events. Until state finances improve, UK Chancellor Hunt fights tax cuts. BoJ versus BoE concerns may have a significant influence in shaping near-term movements.
GBP/JPY exhibits modest advances near 161.00 as it reflects the market's cautious disposition at the start of a pivotal week including numerous monetary policy meetings and important data. Nevertheless, the cross-currency pair maintains its two-week rebound amid rising US Treasury bond yields and hawkish Bank of England expectations (BoE).
After reversing a two-week slump at the conclusion of last Friday, 10-year US Treasury rates remain uninspiring near 3.51%, despite a small bid at press time. Concerns regarding the Bank of England's 0.50% rate hike to manage inflation appear to keep GBP/JPY buyers optimistic.
Notably, the discussions around the UK's reluctance toward tax cuts appear to support the pair's upward momentum. British finance minister Jeremy Hunt is quoted by Reuters as stating on Friday that he intends to prioritize tax cuts for firms whenever the public finances allow for it.
On the other hand, GBP/JPY sellers are optimistic due to the Bank of Japan's (BoJ) persistent attempts to defend the Yield Curve Control (YCC) with lately stronger inflation statistics from Tokyo. On the same level may be the more more stable fundamentals of Japan compared to those of the United Kingdom.
In the near future, the GBP/JPY exchange rate may experience a short-term comeback due to cautious optimism on the market and diminishing fears of UK worker strikes. However, the BoE's rate hike and efforts to contain inflation without damaging productivity will garner significant attention.
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