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GBP/JPY pushes above 215 as yen stays pressured

The yen outlook is supported by a large UK-Japan interest rate gap, with Japan’s BoJ at 1.0% versus the BoE at 3.75%, or about 275 bps.

Reported · Written up by our desk · Major Pairs

GBP/JPY climbed above the 215.0 psychological level during the first half of the European session on Tuesday, after recovering from a modest intraday dip, according to FXStreet.

The move reflects continued underperformance in the Japanese yen, with FXStreet pointing to concerns about Japan’s fiscal outlook and the impact of Prime Minister Sanae Takaichi’s economic stimulus and tax cuts.

FXStreet also cited the persistently wide interest rate gap that supports carry trade flows, noting the BoJ’s short-term policy rate is 1.0%, compared with the Bank of England’s base rate at 3.75%, a gap of about 275 basis points.

Ahead of UK data, including Q2 GDP on Thursday, traders were more cautious, FXStreet said, while energy supply risks linked to the Middle East conflict add to worries for Japan, which depends on the region for roughly 95% of its crude oil.

Latest closeWTI crude $82.30 ▲5.3%

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