The British pound rises against the yen to 215.35-215.40, driven by Japan’s low rates and fiscal concerns despite BoJ tightening.
The GBP/JPY cross reached a nearly two-week high near 215.35-215.40 during Wednesday’s European session, extending its recovery from last week’s lows. The yen’s decline follows structural headwinds, including Japan’s ultra-low borrowing costs despite the Bank of Japan’s recent rate hike to the highest level since 1995.
Japan’s fiscal outlook has deteriorated due to aggressive stimulus and tax cuts under Prime Minister Sanae Takaichi, while energy disruptions linked to the Iran conflict add further pressure. The BoJ’s potential September rate hike has failed to support the yen, reinforcing the GBP/JPY uptrend.
Traders may await Thursday’s UK Q2 GDP data before increasing bullish bets on the pound, though the fundamental backdrop remains supportive for the cross.