• GBP/JPY lacks any firm intraday directional bias as traders opt to wait for the BoE policy update.
• The UK’s fiscal concerns continue to undermine the GBP and act as a headwind for spot prices.
• BoJ rate hike bets help revive the JPY demand amid intervention fears and further cap the cross.

The GBP/JPY cross struggles to capitalize on the previous day's solid recovery from the 199.00 neighborhood, or an over one-month low, and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade around the 201.00 mark, nearly unchanged for the day, as traders keenly await the Bank of England (BoE) policy update before positioning for the next leg of a directional move.

Softer inflation and fiscal headwinds, along with a further slowdown in wage growth and a rise in unemployment, give the BoE more room to ease policy further. Moreover, the markets are pricing in a 1-in-3 chance of a 25 basis points (bps) rate cut later today and a roughly around 70% probability of a rate reduction by the year-end. Hence, the crucial BoE decision will play a key role in influencing the British Pound (GBP) and providing some meaningful impetus to the GBP/JPY cross.

Heading into the key central bank event risk, concerns about the UK's fiscal situation ahead of Finance Minister Rachel Reeves' Autumn budget on November 26 hold back the GBP bulls from placing aggressive bullish bets. This, along with an uptick in the Japanese Yen (JPY), contributes to capping the upside for the GBP/JPY cross. Minutes of the Bank of Japan's September 18-19 meeting, released on Wednesday, reaffirmed bets for an imminent interest rate hike and underpinned the JPY.

Apart from this, speculations that Japanese authorities could intervene to stem any further weakness in the domestic currency act as a tailwind for the JPY. Meanwhile, the BoJ remains reluctant to commit to further rate hikes amid expectations that Japan's new Prime Minister Sanae Takaichi will pursue significant fiscal spending to tackle inflation and boost the economy. This, in turn, should keep a lid on any meaningful upside for the JPY and continue to support the GBP/JPY cross.