Gbpjpy Recovers On Softer Jpy

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Gbpjpy Recovers On Softer Jpy

Gbp/Jpy Recovers To 191.00 On Softer Japanese Yen

GBP/JPY is trading near 191.20 and has extended its recovery from lows. In the process, GBP/JPY has also ended its 2-day losing streak and is now trading positively on Tuesday.

The real reason behind the upside in the GBP/JPY is the selling of Japanese Yen across the board. Later this week, the Japanese CPI will be released on Friday, which could also have major implications for the GBP/JPY.

Boj Hopeful About Achieving 2% Inflation Target

According to BoJ forecasts, a strong economic recovery will help them to achieve the 2% inflation target in a sustainable manner. This will also make it easy for the Bank of Japan to increase the interest rate as part of the bank's policy to change its policy.

If these things happen, it will provide a major boost to the JPY and thus act as a major headwind for the cross. In that case, the GBP/JPY cross will turn lower and even touch 190.00, 188.00, and 185.00.

Meanwhile, the risk-on mood continues to be helpful for the GBP as it is trading positively against the JPY. In fact, most of the other JPY pairs show that the Japanese Yen is on the back foot.

This is a sign that the traders are now moving away from the safe haven assets amid a decline in the geopolitical tension. However, a hawkish campaign from the BoJ will shift that sentiment in favor of the JPY.

On the United Kingdom's side, the BoE is expected to keep rates at 5.0%. So, at the September meeting, no change was expected from the BoE.

According to one chief economist, the BoE will likely wait until November to deliver the next rate cut. If this turns out to be true, it will provide a temporary relief to the GBP. Nonetheless, the fundamental situation is changing very rapidly in favor of the JPY, which is a threat to the recent uptrend in GBP/JPY.

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