Pound Rallies vs Yen After BoJ Delivers Split Rate Hike

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: September 18, 2026

Key Moments

GBP/JPY climbed above 209.50 during the Asian session, touching its highest level in nearly two weeks.
The Bank of Japan lifted its short-term rate by 25 bps to 1.25%, described as a 31-year high, with a 7-2 split vote.
Softer Japanese inflation data and a cautious BoE stance are shaping expectations for both JPY and GBP.

GBP/JPY Rallies After BoJ Decision

The GBP/JPY pair attracted renewed buying interest in the Asian session on Friday, extending its intraday rise and pushing to a near two-week peak above 209.50. The move followed the Bank of Japan’s latest policy announcement, which triggered fresh weakness in the Japanese Yen (JPY).

Market participants responded to the combination of a widely anticipated rate increase from the BoJ and lingering doubts about how aggressively the central bank will tighten policy going forward. This dynamic supported the British Pound (GBP) against the JPY and drove the cross higher.

BoJ Lifts Rates to 1.25% but Board Split Tempers Aggressive Bets

As expected, the Bank of Japan raised its short-term interest rate by 25 basis points to 1.25% at the conclusion of its September policy meeting, describing this level as a 31-year high. In its policy statement, the central bank signaled that it intends to continue adjusting rates in line with developments in economic activity, inflation trends, and financial conditions.

However, the decision was not unanimous. The 7-2 vote revealed divisions within the policy board, which led traders to scale back expectations for a more forceful tightening path. This cautious interpretation is reinforced by recent data showing that inflation in Japan eased slightly in August.

Softening Japanese Inflation Undermines Yen

Recent price data from Japan showed that the headline Consumer Price Index (CPI) remained at 1.9% year-over-year in August. At the same time, core inflation unexpectedly slipped to 1.7%. In addition, core CPI excluding both fresh food and energy stayed below the BoJ’s 2% target.

These readings are perceived as undercutting support for the JPY, as they reduce pressure on the BoJ to accelerate the pace of future rate increases. Against this backdrop, the GBP has drawn support from subdued US Dollar (USD) price action, adding to the upward momentum in GBP/JPY.

BoE Stance and Market Caution Ahead of BoJ Press Conference

Despite the GBP’s gains versus the JPY, the Pound’s upside may be limited by the Bank of England’s recent decision to leave policy unchanged in a manner characterized as dovish. That outcome could act as a headwind for further sustained appreciation in GBP.

On the JPY side, bearish traders may be reluctant to build larger positions before hearing more from BoJ officials. Market participants are expected to closely follow the post-meeting press conference, where remarks from Governor Kazuo Ueda will be examined for additional clarity on the timing and pace of any subsequent tightening steps.

Given this backdrop, some analysts may see merit in waiting for more decisive follow-through buying before assuming that the GBP/JPY pair will extend its rebound from the 207.00 area. That zone marked the year-to-date low reached last week and remains a key reference point for price action.

BoJ Interest Rate Decision – Latest Data

The following table summarizes the latest Bank of Japan interest rate decision as reported:

Event	Last Release	Frequency	Actual	Consensus	Previous	Source
BoJ Interest Rate Decision	Fri Sep 18, 2026 02:54	Irregular	1.25%	1.25%	1%	Bank of Japan

About the BoJ Rate Decision

The Bank of Japan announces its interest rate decision following each of its eight scheduled meetings per year. A stance viewed as hawkish on the inflation outlook, accompanied by a rate increase, is generally considered supportive for the Japanese Yen. Conversely, a more dovish posture in which rates are left unchanged or cut is usually interpreted as negative for the JPY.