The GBP/JPY cross attracts fresh sellers in the vicinity of mid-215.00s and slides to the lower end of its daily range during the early European session on Friday.
Spot prices, however, remain confined within the previous day’s range and currently trade around the 215.00 psychological mark, nearly unchanged for the day
Reports that Japan may stop signaling intervention plans in advance caught traders off guard on Thursday. Moreover, Japan’s Finance Minister Satsuki Katayama reiterated earlier today that officials are ready to act appropriately on currency fluctuations. Adding to this, Japan’s chief cabinet secretary, Minoru Kihara, said that the government is closely monitoring market movements with a high sense of urgency and will take appropriate action on FX at all times as needed.
This, in turn, prompts some follow-through unwinding of speculative short positions around the Japanese Yen (JPY) and turns out to be a key factor weighing on the GBP/JPY cross. The JPY bulls, however, seem hesitant in the absence of actual intervention. Moreover, the persistently wide gap between Japan’s low interest rates and the higher yields available in other major economies, including the UK, acts as a headwind for the JPY.