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GBP/JPY reaches 164.00 as the probability of a BOJ conservative policy rises
As a result of policy difference between the BOE and BOJ, the GBP/JPY exchange rate has quickly surpassed 164,000. The BOJ is anticipated to maintain its current monetary stance in order to continue infusing money into the economy. The Bank of England boosted rates by 25 basis points to 1.25 percent.
The GBP/JPY pair has quickly surpassed its two-day high and the key resistance level of 164.00 as the probability of an ultra-loose monetary policy by the Bank of Japan rises (BOJ). A difference in monetary policy between the Bank of England (BOE) and the Bank of Japan (BOJ) has supported the pound bulls versus the Japanese yen.
Thursday's monetary policy meeting resulted in a 25 basis point (bps) increase in the Bank of England's interest rates. The interest rates have officially hiked to 1.25 percent. BOE Governor Andrew Bailey and his colleagues made a judgment that was consistent with market participants' expectations. In light of inflationary pressures in the UK economy, a 50-bps rate rise should have been implemented, but the BOE's inability to fully tighten monetary policy is a result of weaker growth expectations.
The UK Consumer Price Index (CPI) has risen beyond 9 percent on an annual basis, and rising price pressures are aggressively cutting into the incomes of people. Therefore, the BOE is required to reestablish lower inflation levels as quickly as possible.
Returning to the Tokyo front, the BOJ will continue to inject helicopter money into the economy as their inflation rate of 2.5% per annum is significantly tainted by high oil prices. The BOJ is anticipated to maintain its current stance despite the persistence of rising pricing pressures.
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