GBP/JPY steadies near 1-month low ahead of major cenbank meetings

The GBP/JPY currency pair was mostly steady on Monday, not far from last week’s 1-month low, ahead of major central bank meetings, including the Bank of England on Thursday and the Bank of Japan on Friday.

The Bank of England is expected to deliver its 15th consecutive interest rate hike, which would bring borrowing costs to a fresh 2008-high of 5.5%.

In August, the bank’s Monetary Policy Committee voted 6-3 in favor of the 25 basis point hike, while 2 members preferred a second consecutive 50 bps hike and 1 member voted in favor of no change.

BoE policy makers noted they would ensure the benchmark interest rate was sufficiently restrictive for sufficiently long to drive inflation down to the 2% target sustainably in the medium term.

Meanwhile, the Bank of Japan’s September policy meeting will be closely watched for clues over when its negative interest rate policy may be reversed.

In July, the BoJ left its benchmark short-term interest rate without change at -0.10% and also kept a 0% cap on 10-year bond yields set under its yield curve control policy.

Still, the BoJ pledged higher yield curve control flexibility by offering to buy 10-year Japanese government bonds at 1% in fixed-rate operations, instead of 0.5% previously.

Last week, Bank of Japan Governor Kazuo Ueda said the central bank could discontinue its policy of negative interest rates when the 2% inflation target is achieved.

But Ueda once again highlighted the need to keep monetary policy accommodative until the central bank is convinced inflation will sustainably remain at levels near 2%, backed by robust demand and wage growth.

Both policy meetings will be preceded by UK and Japanese CPI inflation figures for August.

As of 7:44 GMT on Monday GBP/JPY was edging down 0.10% to trade at 182.860. Last Thursday, the minor Forex pair went down as low as 182.511. The latter has been the pair’s weakest level since August 9th (182.360).