A 275 basis point rate gap between the BoE and BoJ supports the pound against the yen ahead of UK GDP data.
The GBP/JPY cross trades near a one-week high above 215.00, driven by a weaker Japanese yen amid fiscal concerns and aggressive economic stimulus. Japan’s short-term policy rate remains at 1.00%, while the Bank of England’s base rate stands at 3.75%, creating a 275 basis point differential.
The yen’s underperformance follows a short-lived recovery after a late-July US-Japan intervention, with carry trade demand and energy supply risks adding pressure. Japan’s reliance on Middle East crude oil imports further weighs on sentiment.
Investors await UK economic data, while modest USD strength limits GBP gains. The cross remains poised for further upside if yen weakness continues.