GBP/JPY stays above 196.00 as traders wait for BoE decision
The GBP/JPY currency pair is holding steady above the 196.00 level as of early Wednesday trading. After dropping to a seven-week low earlier, the pair bounced back slightly, reaching the mid-196.00 zone. However, there wasn’t much strength behind the move, as forex traders are staying cautious ahead of the Bank of England’s interest rate decision on Thursday.
Most market participants expect the BoE to cut rates by 25 basis points, bringing the interest rate down to 4%. This move is likely because the UK job market is showing signs of weakness and wage growth is slowing down. Still, inflation in the UK is not falling fast enough, so the central bank may take a careful approach while adjusting its monetary policy.
At the same time, the Bank of Japan is turning more hawkish. The BoJ raised its inflation outlook recently and hinted at possible rate hikes if the economy and prices keep moving upward. This difference in central bank policies—BoE possibly cutting while BoJ considers tightening—could impact the GBP/JPY forecast and support the Japanese yen.
From a technical point of view, GBP/JPY recently fell below its 50-day moving average, which suggests more downside risk. But overall market sentiment is still positive, which might limit further drops.
Impact:
GBP/JPY could stay range-bound until the BoE update. A rate cut might push it lower, while stronger BoJ policy could boost yen strength in coming days.
