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GBP/JPY holds below 217.00 as yen intervention risks stay in focus
The Bank of Japan raised its policy rate to 1.0% in June, keeping the 275 basis point rate gap with the UK active and limiting how far JPY can strengthen.
GBP/JPY failed to build momentum in early European trading and stayed pinned just below the 217.00 level, moving within the prior day’s range. FXStreet said the pair is effectively trading sideways as markets watch for potential Japanese authorities intervention to support the yen.
Adding to the yen’s support, Japan’s Finance Minister Satsuki Katayama said changes to the Government Pension Investment Fund asset allocation could be considered if the investment environment shifts sharply. Still, FXStreet noted that Japan’s wide interest rate differential versus other major economies is restraining yen bulls from pressing aggressively.
FXStreet pointed to the rate backdrop, citing the Bank of Japan’s June hike to 1.0%, compared with the Bank of England base rate at 3.75%, leaving roughly a 275 basis point gap that keeps the JPY carry trade active. The outlet also tied GBP support to a softer US dollar and to easing UK political uncertainty, while warning that heightened US and Iran tensions and possible Strait of Hormuz disruptions add macroeconomic risk given Japan’s reliance on imported Middle East oil.