GBP/JPY trades firmly near yearly high above 204.00 on fading BoJ hawkish bets

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The GBP/JPY pair exhibits strength near a fresh yearly high around 204.50 during Wednesday’s European trading session, posted earlier in the day.

GBP/JPY refreshes yearly high near 204.50 on Wednesday amid continued weakness in the Japanese Yen.
Traders pare bets supporting interest rate hikes by the BoJ in the policy meetings remaining this year.
Investors await BoE Pill’s speech for fresh cues on the monetary policy outlook.

The GBP/JPY pair exhibits strength near a fresh yearly high around 204.50 during Wednesday’s European trading session, posted earlier in the day. The pair strengthens as underperformance from the Japanese Yen (JPY), with investors anticipating that the Bank of Japan (BoJ) will not tighten its monetary policy further in the near term.

Japanese Yen Price This week

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the weakest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.92%	0.43%	1.95%	0.09%	0.35%	1.37%	0.61%
EUR	-0.92%		-0.60%	0.94%	-0.86%	-0.61%	0.41%	-0.35%
GBP	-0.43%	0.60%		1.63%	-0.26%	-0.01%	1.02%	0.26%
JPY	-1.95%	-0.94%	-1.63%		-1.78%	-1.63%	-0.64%	-1.36%
CAD	-0.09%	0.86%	0.26%	1.78%		0.30%	1.29%	0.52%
AUD	-0.35%	0.61%	0.00%	1.63%	-0.30%		1.03%	0.27%
NZD	-1.37%	-0.41%	-1.02%	0.64%	-1.29%	-1.03%		-0.75%
CHF	-0.61%	0.35%	-0.26%	1.36%	-0.52%	-0.27%	0.75%

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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

BoJ hawkish bets have disappeared since the election of Sanae Takaichi as Japan’s Prime Minister who has favoured higher fiscal spending and tax cuts, and argued against tight monetary policy conditions.

Analysts at MUFG have stated that Japan's rates markets have priced out a central bank rate hikes for this calendar year, following Takaichi's win, and now see the next hike possibly coming only in March 2026.

Fading BoJ hawkish bets have resulted in weakness in the Japanese Yen, which was outperforming in past few months as Japan’s central bank was keeping the door open for further interest rate hikes.

Though investors have underpinned the Pound Sterling (GBP) against the Japanese Yen, the former is exhibiting a mixed performance against its other peers. Meanwhile, investors seek fresh cues about whether the Bank of England (BoE) will cut interest rates in the remainder of the year.

Market experts are mixed about whether the BoE will loosen monetary policy conditions further this year as inflationary pressures remain almost double the central bank’s target of 2%, and the job market continues to deteriorate. In Wednesday’s session, investors will focus on the speech from BoE Chief Economist Huw Pill, which is scheduled at 15:00 GMT.

Economic Indicator

BoE's Pill speech

Huw Pill is the Chief Economist and Executive Director for Monetary Analysis and Research of the Bank of England. He is a member of the Monetary Policy Committee. Huw is responsible for the analysis the BoE uses to make monetary policy decisions. He also leads the research that supports all other functions.