Snapshot: GBP/JPY remains bid near 201.40, supported by the stark policy divergence after the Bank of Japan held its rate at 0.50% at 12:19 JST. Although Governor Ueda flagged a willingness to hike, the Bank of England’s cautious stance at 4.50%—backed by resilient services CPI near 5%—keeps the carry trade highly lucrative for yield-seekers.
- The UK’s cooling inflation profile, with Core CPI dropping to 2.5%, is offset by sticky wage pressures, making the BoE reluctant to cut and establishing solid support for the cross above 200.50.
- Watch-item for the NY session is the intervention risk from Tokyo; any rapid move towards recent highs will trigger MoF warnings, especially if the US 10Y yield rising to 4.48% puts fresh pressure on the yen.
Bias into NY: We lean bullish targeting the 202.20 level, as the UK-Japan policy rate spread of 400 basis points remains too wide to fade, supported further by a constructive risk backdrop as the VIX drops 1.48 points to 16.2.