Snapshot: GBP/JPY is trading around 192.50, up 0.2% on the session, buoyed by the relatively hawkish stance of the Bank of England compared to the Bank of Japan. BoE’s latest hold at 4.50% with a dissenting voice favouring a cut contrasts with the BoJ’s cautious normalisation bias, maintaining upward pressure on the cross.
- Watch 193.00 as the next key resistance level.
- Risk: A surprise dovish turn in BoE rhetoric or intervention from the MoF on Yen weakness could quickly reverse the trend.
Bias into NY: We favour further upside in GBP/JPY, targeting 193.50, as UK unemployment continues to decline despite sticky inflation, keeping the BoE on hold for longer. Rising US 2Y and 10Y yields, while supportive of the dollar, are secondary to the monetary policy divergence favouring Sterling.