GBP/JPY tumbles to near 202.00 on slower-than-expected UK inflation growth

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.02%	0.36%	-0.09%	-0.12%	-0.23%	-0.21%	-0.05%
EUR	0.02%		0.37%	-0.07%	-0.10%	-0.22%	-0.17%	-0.03%
GBP	-0.36%	-0.37%		-0.44%	-0.47%	-0.58%	-0.54%	-0.40%
JPY	0.09%	0.07%	0.44%		-0.05%	-0.15%	-0.11%	0.05%
CAD	0.12%	0.10%	0.47%	0.05%		-0.12%	-0.07%	0.08%
AUD	0.23%	0.22%	0.58%	0.15%	0.12%		0.05%	0.19%
NZD	0.21%	0.17%	0.54%	0.11%	0.07%	-0.05%		0.14%
CHF	0.05%	0.03%	0.40%	-0.05%	-0.08%	-0.19%	-0.14%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

The Office for National Statistics (ONS) has reported that the core inflation, which excludes volatile items, rose at a moderate pace of 3.5% on an annualized basis, slower than estimates of 3.7% and the prior reading of 3.6%. In the same period, the headline CPI grew steadily by 3.8%, softer than expectations of 4.0%. On month, the headline inflation remained flat after growing 0.3% in August.

Signs of growth in inflationary pressures peaking are expected to prompt traders to raise bets supporting more interest rate cuts by the Bank of England (BoE) in the remaining year. In the September policy meeting, the BoE stated that price pressures would peak around 4% this month.

This week, investors will also focus on the UK Retail Sales data for September, which will be published on Friday. The Retail Sales data would also influence market expectations for the BoE’s monetary policy outlook.

Meanwhile, the outlook of the Japanese Yen (JPY) has become uncertain as Japan’s newly elected Sanae Takaichi Prime Minister (PM) after its Liberal Democratic Party (LDP) and Innovation Party formed a coalition government is expected to follow economic policies drawn by former PM Shinzo Abe. Market experts believe that Takaichi will favor big spending plans to boost the economy.

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.