GBP/JPY steadies near 212.00 as Yen recovery loses steam

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The Pound holds right below weekly highs against the Japanese Yen, trading at 211.65 at the time of writing following Wednesday’s rebound from 210.00 lows.

GBP/JPY steadies near 212.00 as Yen recovery loses steam.
US Treasury Secretary Bessent denied any coordinated plan to support the Yen on Wednesday.
Later on Thursday, Tokyo CPI data might test the credibility of BoJ's tightening plans.

The Pound holds right below weekly highs against the Japanese Yen, trading at 211.65 at the time of writing following Wednesday’s rebound from 210.00 lows. US Treasury Secretary Scott Bessent’s comments denying any plan to intervene in markets to support JPY stability, a rumour that triggered a sharp JPY recovery last week

Less than 24 hours after Trump praised the Greenback's depreciation, Bessent affirmed in a Wednesday Bloomberg interview that the US administration has a strong Dollar policy.

These comments offset the impact of the hawkishly tilted minutes of the latest Bank of Japan (BoJ) monetary policy meeting. The minutes showed general agreement that rising inflationary pressures, a weak Yen, and wage growth justify further monetary tightening.

Later on Thursday, the advanced Tokyo Consumer Price Index (CPI) will be closely watched to confirm those views. Consumer inflation in Japan’s capital eased to 2% year-on-year in December from 2.7% in November, and the market consensus for the core CPI suggests that price pressures might have moderated further in January, which could add negative pressure on the Yen.

In the UK, data released earlier this week revealed that shop price inflation jumped in January to its highest levels in nearly two years, boosted by rising food prices and the high cost of fuel. These figures boost expectations of a hot CPI reading in January and strengthen the case for steady BoE interest rates, providing some support to the Pound.

Economic Indicator

Tokyo Consumer Price Index (YoY)

The Tokyo Consumer Price Index (CPI), released by the Statistics Bureau of Japan on a monthly basis, measures the price fluctuation of goods and services purchased by households in the Tokyo region. The index is widely considered as a leading indicator of Japan’s overall CPI as it is published weeks before the nationwide reading. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Japanese Yen (JPY), while a low reading is seen as bearish.

Economic Indicator

Tokyo CPI ex Fresh Food (YoY)

The Tokyo Consumer Price Index (CPI), released by the Statistics Bureau of Japan on a monthly basis, measures the price fluctuation of goods and services purchased by households in the Tokyo region excluding fresh food, whose prices often fluctuate depending on the weather. The index is widely considered as a leading indicator of Japan’s overall CPI as it is published weeks before the nationwide reading. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Japanese Yen (JPY), while a low reading is seen as bearish.