The cross surged nearly 100 pips amid Middle East tensions and BoJ intervention concerns, offsetting UK political risks.
The GBP/JPY cross climbed to 213.70 during early European trading, recovering nearly 100 pips from its daily low. The rally followed a modest bearish gap at Monday’s open, driven by a weaker Japanese Yen (JPY) despite ongoing UK political turbulence.
Investors remain focused on Middle East conflict risks and energy supply disruptions via the Strait of Hormuz, which have overshadowed hawkish Bank of Japan (BoJ) expectations. Japan’s Finance Minister reiterated readiness to intervene in currency markets, while BoJ minutes revealed calls for faster rate hikes to curb inflation overshooting.
Despite these signals, the JPY failed to gain traction, while the British Pound (GBP) faced headwinds from UK political uncertainty and a stronger US Dollar (USD). The cross’s upside may remain limited as traders await further developments.