GBP/JPY rose to a fresh 34-year high above 200.60 on Tuesday as the yen pair continued to strengthen following suspected “yen intervention” by the Bank of Japan (BoJ) and the Ministry of Finance.
There has been no official statement from the BoJ or the Ministry of Finance, but the market is defying the Japanese authorities and shorting the yen, sending it back to multi-decade lows. The GBP/JPY pair hit a 34-year high bid as the market simply could not support the yen due to the wide interest rate gap between the BoJ and other central banks, including the Bank of England (BOE).
The key data point for GBP/JPY this week will be the latest inflation data from the Consumer Price Index (CPI) in Tokyo, Japan, due on Thursday. Tokyo core inflation for the month ending May is expected to rise from 1.6% to 1.9%. Tokyo headline inflation was 1.8% in April.
The market remains uncertain as to when the Bank of England will deliver its much-anticipated rate cut. Hopes for a rate cut in June have been dashed, and investors are looking for a signal that the BoE will make its first rate cut in September.