GBP/JPY extends its slide on Friday as suspected intervention by Japanese authorities rattles the FX market and lifts the Yen across the board, pushing the cross further away from the multi-year high of 219.16 touched earlier this month.
At the time of writing, GBP/JPY trades around 213.75, hovering near June lows
Reuters reported, citing a market source, that Japan likely conducted a large-scale US Dollar-selling, Japanese Yen-buying intervention worth as much as $58.97 billion during Thursday’s American trading hours. The move triggered a drop of more than 500 pips in GBP/JPY. Separately, Reuters, citing a source familiar with the matter, reported that the US Treasury informed a number of banks it may intervene in the Yen market on Friday and advised them to “stand ready for future action.” The latest leg lower has weakened GBP/JPY’s near-term bullish structure.
However, the broader outlook remains tilted to the upside, underpinned by the wide interest-rate differential between the Bank of England (BoE) and the Bank of Japan (BoJ). The BoJ left its policy rate unchanged at 1.0% on Friday in an 8-1 vote. The central bank reiterated that it would continue raising borrowing costs if economic activity and inflation evolve in line with its forecasts.