Key points
- GBP/JPY trades in tight range, not far from four-week peak of 183.248
- Bank of England expected to hike rates to 15-year high of 5.25% today
- Market players still assessing Bank of Japan’s policy decision last week
The GBP/JPY currency pair traded within a narrow range on Thursday, while holding in proximity to a four-week high, ahead of the Bank of England’s monetary policy decision later in the day.
The central bank is largely expected to raise its policy interest rate by 25 basis points to a fresh 15-year high of 5.25% at its August meeting, following a sizable 50 basis point hike in June.
The BoE has delivered 13 consecutive rate increases in an attempt to curb persistent inflation.
Meanwhile, the Japanese Yen has experienced volatility after the Bank of Japan’s decision last week to make its yield curve control policy more flexible.
The central bank said it would offer to buy 10-year Japanese government bonds at 1% in fixed-rate operations, instead of 0.5% previously.
BoJ deputy governor Shinichi Uchida said on Wednesday that the decision was meant to make BoJ’s massive stimulus more sustainable and it was not a prelude to an exit from ultra-easy monetary policy.
“The weakness has likely been driven by unwinds of more significant policy normalisation trades,” Karen Fishman, a senior strategist at Goldman Sachs, was quoted as saying by Reuters.
As of 7:24 GMT on Thursday GBP/JPY was inching down 0.07% to trade at 181.951. Earlier this week, the minor Forex pair went up as high as 183.248. The latter has been the pair’s strongest level since July 7th (183.592).
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