GBP/JPY Outlook: Slightly positive, but likely to move sideways as the rate trades well above its recent average while lacking strong directional drivers.
Key drivers:
- The Bank of England has indicated a cautious approach towards rate cuts, which supports the British Pound against the Japanese yen.
- Recent oil prices have remained above average, which tends to support the Yen as a safe-haven currency, but volatility could influence its strength.
- Japan’s inflation eased to its lowest in over a year, prompting potential adjustments in the Bank of Japan’s policy, which could impact the Yen's value.
Range: Expect GBP/JPY to drift within its recent 3-month trading range without testing extremes at this time.
What could change it:
- Upside risk: A strengthening UK jobs report could boost the Pound.
- Downside risk: New US tariffs could intensify recession fears in the UK, impacting the Pound negatively.