• GBP/JPY regains positive traction on Tuesday, though it remains confined in a familiar range.
• Receding safe-haven demand and Japan’s fiscal woes undermine the JPY, supporting the cross.
• The divergent BoJ-BoE policy expectations might cap spot prices and warrant caution for bulls.

The GBP/JPY cross attracts fresh buyers following the previous day's two-way directionless price move and climbs back above the 209.00 mark during the Asian session on Tuesday. Spot prices, however, remain confined in a nearly two-week-old range, warranting some caution for aggressive bullish traders.

As US tariffs-inspired market volatility subsides, signs of stability in the equity markets undermine demand for traditional safe-haven assets and the Japanese Yen (JPY). Furthermore, investors remain worried about Japan's fiscal health amid expectations that Prime Minister Sanae Takaichi will announce more stimulus to boost the economy. Apart from this, Japan's weak Q4 GDP growth figures seem to have tempered expectations for an immediate rate hike by the Bank of Japan (BoJ), which further seems to weigh on JPY and acts as a tailwind for the GBP/JPY cross.

Despite the aforementioned negative factors, the JPY bears seem reluctant to place aggressive bets amid the growing acceptance that the BoJ will stick to its policy normalization path. This marks a significant divergence in comparison to bets that the Bank of England (BoE) will cut interest rates as early as the March meeting. Apart from this, geopolitical risks could limit deeper losses for the safe-haven JPY amid speculations that authorities could step in to stem further weakness in the JPY. This, in turn, might keep a lid on any meaningful appreciation for the GBP/JPY cross.

The aforementioned mixed fundamental backdrop makes it prudent to wait for a sustained strength beyond the 209.60-209.65 horizontal barrier before confirming that the recent corrective fall from the highest level since July 2008 has run its course. Traders now look to the BoE's Monetary Policy Report hearings, where comments from Governor Andrew Bailey and other MPC members will influence the British Pound (GBP). Apart from this, the broader market risk sentiment will be looked upon to grab short-term trading opportunities around the GBP/JPY cross.