Snapshot: Sterling remains well-supported against the Yen following this morning’s 07:00 BST UK inflation data, where core CPI ticked up to 2.6%, reinforcing the Bank of England’s cautious stance. This domestic policy bias was further cemented by the Governor’s interview transcript published at 09:00 BST, highlighting a clear reluctance to cut. Meanwhile, the Bank of Japan’s slow normalisation at 0.50% keeps the yield advantage heavily tilted in Sterling’s favour.
- Sticky UK core CPI at 2.6% and services inflation near 5% solidify the BoE’s 8-1 hold bias, establishing a firm domestic floor for the cross.
- Tokyo’s verbal intervention risk remains acute as the Yen slides, meaning sudden headline risk from the MoF is the primary threat to tactical longs during the NY session.
Bias into NY: We hold a bullish bias on GBP/JPY targeting a push toward 202.00, as the widening real yield advantage for Sterling is amplified by a stable risk environment with the VIX comfortable at 16.2.