The GBP/JPY cross attracts buyers for the second consecutive day and climbs to a nearly two-week high during the early part of the European session on Tuesday.
Bulls now await a sustained move and acceptance above the 215.00 psychological mark before positioning for any further gains amid expectations of a possible intervention by Japanese authorities
In fact, Japan’s Chief Cabinet Secretary Minoru Kihara reiterated during a regularly scheduled press conference that he is always ready to take necessary action on forex. Furthermore, Japan’s Finance Minister Satsuki Katayama said that her government will respond appropriately to currency moves at any time as needed. This, along with the Bank of Japan’s (BoJ) hawkish outlook, holds back traders from placing aggressive bearish bets on the Japanese Yen (JPY) and caps the GBP/JPY cross.
The Summary of Opinions from the BoJ’s June meeting, released last week, showed that policymakers debated mounting inflation risks, with some calling for faster rate increases to near levels deemed neutral to the economy. Adding to this, signs that inflation in Japan was now picking up endorse the BoJ’s policy tightening stance. Despite the supporting factors, the JPY struggles to lure buyers as borrowing costs in Japan remain lower than in advanced G7 economies, including the UK.