- GBP/JPY appreciates due to mixed expectations regarding the BoJ rate hike in December.
- BoJ board member Toyoaki Nakamura emphasized the need for caution in raising rates.
- BoE is widely expected to keep its current interest rates at 4.75% unchanged on December 19.
GBP/JPY extends its gains for the second successive session, trading around 193.10 during the European hours on Tuesday. The recent upward movement in the GBP/JPY cross is likely driven by a weaker Japanese Yen (JPY), stemming from mixed expectations regarding a potential Bank of Japan (BoJ) rate hike in December.
BoJ Governor Kazuo Ueda recently indicated that the timing for the next rate hike is nearing, bolstered by strong underlying inflation data in Japan. This has fueled speculation about a possible rate hike during the BoJ’s December 18–19 policy meeting.
However, conflicting media reports suggest the BoJ might forgo a rate hike this month. Adding to the uncertainty, dovish BoJ board member Toyoaki Nakamura has cautioned against premature rate increases, further weighing on the Japanese Yen.
The Pound Sterling (GBP) gains ground against its major peers as investors become increasingly confident that the Bank of England (BoE) will maintain its current interest rates at 4.75% in the monetary policy meeting on December 19.
Most BoE officials are anticipated to vote for an unchanged interest rate, as UK headline inflation has risen again after briefly falling below the bank’s 2% target. The BoE had previously forecasted a rebound in inflation after it temporarily aligned with the desired range.
