GBP/JPY edges higher on Monday as the Japanese Yen (JPY) underperforms across the G10 currency space, with structural headwinds limiting the impact of recent intervention.
At the time of writing, the cross trades around 214.70, up 0.85% on the day
Japanese data also offered little support to the Yen, as the current account unexpectedly slipped into deficit in June, marking the first shortfall in 17 months. Japan intervened on three occasions between late April and early May before returning to the market with two more operations in late July, including a rare coordinated move with the United States (US). The latest action came after the Yen fell to a 40-year low against the US Dollar (USD), while GBP/JPY climbed to levels last seen in 2008.
Both countries have warned that they could intervene again if needed. However, intervention has failed to provide lasting support to the Yen as Japan’s monetary and fiscal policies continue to cloud the outlook. Although the Bank of Japan (BoJ) has moved away from its decade-long ultra-loose policy and started raising interest rates, the pace of tightening is slow.