The GBP/JPY pair rebounds after the Bank of Japan (BoJ) raises its short-term rate target by 15 basis points, shifting from 0%-0.1% to 0.15%-0.25%. Despite this move, the Japanese Yen weakens as the BoJ also tapers its Japanese government bonds buying. The BoJ Press Conference will provide further insights into Japan’s monetary policy direction.
Chief Cabinet Secretary Yoshimasa Hayashi emphasizes close coordination between the BoJ and the government to implement effective monetary policies. Meanwhile, traders anticipate a potential rate cut by the Bank of England (BoE) on Thursday, which could weigh on the Pound Sterling (GBP) and limit upside for the GBP/JPY pair.
As the US Federal Reserve (Fed) is expected to maintain rates in July, speculation grows about a rate cut in September. This anticipation is pressuring the US Dollar (USD) and supporting riskier currencies like the British Pound.
Analysis:
The BoJ’s rate hike and JGB buying tapering signal a shift in Japan’s monetary policy, impacting the Yen’s value. The potential BoE rate cut and Fed’s stance also influence currency markets, affecting the GBP/JPY pair. Traders should monitor central bank decisions and economic indicators to navigate currency fluctuations and make informed investment decisions.