Ella 
GBP/JPY faced heavy selling pressure for a third consecutive day, falling below 191.00 on Thursday to hit its lowest level since April 23. However, spot prices managed to rebound a few points and are currently trading around 191.00 as traders preferred to wait and see ahead of the Bank of England (BOE) policy meeting.
Signs that global inflationary pressures are easing are fueling speculation that the Bank of England will cut interest rates later in the day. In fact, financial markets see a more than 65% chance that the Bank of England will cut interest rates from a 16-year high of 5.25%, with another 25 basis points cut expected before the end of the year. This, along with a strong pick-up in dollar demand, has weakened GBP and weighed on GBP/JPY.
On the other hand, the Japanese yen (JPY) continued to be supported by the Bank of Japan’s (BoJ) decision on Wednesday to raise benchmark short-term interest rates by 15 basis points – more than the upper limit of market expectations. Additionally, official data showed that Japanese authorities spent 5.53 trillion yen ($36.8 billion) to intervene in foreign exchange markets in July, which was further positive for the yen and provided support for GBP/JPY.
The fundamental backdrop, along with an intraday break below the all-important 200-day simple moving average (SMA), suggests spot prices have minimal downside resistance. Bearish traders appear reluctant to place new bets on a positive risk tone ahead of key central bank event risks, which tends to weaken demand for the safe-haven yen.
