Snapshot: GBP/JPY is trading with a firm bid as the Bank of England held its Bank Rate at 3.75% at 12:00 London today, opting for a cautious, data-dependent stance rather than a dovish shift. While UK average earnings ticked down slightly to 4.0% in the 07:00 London print, sticky services inflation near 5% and resilient wage dynamics keep the MPC reluctant to signal an imminent easing path, preserving the massive carry yield advantage over the Bank of Japan’s 0.50% anchor.
- The BoE’s decision to maintain rates at 3.75% keeps the monetary policy divergence stark, supporting GBP/JPY on dips back toward the 201.50 handle, especially given the MPC’s reluctance to commit to a rapid rate-cutting path.
- Japanese MoF/BoJ verbal intervention risk remains highly acute for the New York session if spot rates grind higher, with Governor Ueda’s slow normalisation path leaving the Yen vulnerable to persistent carry demand.
Bias into NY: We remain tactically bullish GBP/JPY targeting 203.20, as the BoE’s hold reinforces Sterling’s yield buffer, though further upside will be heavily policed by Japanese policy makers ready to step into the FX market.