The GBP/JPY currency pair drifted lower on Tuesday, reversing gains from the prior session, as the Japanese Yen held firm, supported by persistent concerns that Japanese authorities may step into the foreign exchange market.
On Monday, Finance Minister Satsuki Katayama said that officials were prepared to respond appropriately to currency fluctuations at any time. Those remarks were reinforced on Tuesday when Chief Cabinet Secretary Minoru Kihara reiterated that the government would take decisive action against volatile foreign exchange moves if necessary.
Recent inflation data added another layer of support to the Yen. Fresh figures from the Bank of Japan on Tuesday indicated that underlying price pressures remained elevated. The BoJ’s new core consumer inflation measure rose 2.7% in May, while the core-core CPI increased 2.1%. Both measures eased slightly from April readings of 2.8% and 2.2%, but stayed above the central bank’s 2% target.
Meanwhile, ongoing political uncertainty in the United Kingdom continued to weigh on the British Pound.
The UK has entered a new phase of political turmoil after Prime Minister Keir Starmer resigned on Monday. His departure followed intense pressure sparked by Andy Burnham’s victory in the Makerfield by-election last week. With Starmer stepping down, the Labour Party now faces the task of choosing a new leader to head the government.
“Markets will be focused on Burnham’s views on fiscal policy and whether there will be any relaxation of the current fiscal rules. A loosening in fiscal rules would likely be poorly received by the UK bond market” and weigh on the Pound, strategists at Commonwealth Bank of Australia noted.
The GBP/JPY currency pair was last down 0.23% on the day to trade at 213.50.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
