Snapshot: GBP/JPY maintains its firm bid tone as the Bank of Japan’s monetary policy decision at 12:19 JST confirmed a glacial normalisation path, leaving the massive yield advantage of the 4.50% Bank Rate unchallenged. While cooling UK CPI at 2.8% and core CPI at 2.5% show inflation is moderating, the BoE’s cautious 8-1 vote split and sticky 5% services CPI keep the MPC reluctant to commit to cuts. Governor Ueda’s press conference at 15:30 JST offered no immediate threat to the carry trade, cementing the pair’s constructive path.
- The massive 400bp policy rate differential remains the dominant structural driver, with the BoE reluctant to ease rapidly and the BoJ holding its policy rate at a mere 0.50%.
- The primary risk for the NY session is sudden intervention rhetoric from the MoF as the yen weakens further, a threat amplified by US 10-year yields holding firm at 4.48%.
Bias into NY: We are tactically bullish on the Guppy, expecting further upside pressure toward major psychological resistance, provided global risk appetite remains resilient with the VIX soft at 16.2.