During Thursday's early European session, the GBP/JPY trades in negative territory at 194.45 for the third day in a row.
In light of the Israel-Iran crisis and tariff uncertainties, the BoE is anticipated to hold interest rates steady on Thursday.
The JPY may suffer from less wagers on this year's BoJ rate rises.
In the early hours of Thursday's European trading session, the GBP/JPY cross continues to decline, closing in on 194.45. The prospect of a wider Middle East conflict and potential US involvement causes the value of the pound sterling (GBP) to decline against the Japanese yen (JPY). Later on Thursday, investors will be watching the Bank of England's (BoE) interest rate announcement.
At Thursday's June meeting, the BoE is expected to maintain interest rates at 4.25%. According to a Reuters survey, almost all 60 respondents anticipated a further rate decrease to 3.75% in the last three months of 2025, and nearly all of them anticipated the next quarter-point rate cut to occur in August. Given that the war between Israel and Iran has the potential to raise oil prices, policymakers will be keenly watching the effects of Middle East geopolitical tensions.
"More economic uncertainty is being brought on by the ongoing Middle East conflicts. Monica George Michail, an associate economist at the National Institute of Economic and Social Research, stated, "Therefore, we anticipate the Bank of England to maintain rates on hold this Thursday and make only one additional decrease this year." The riskier assets, such as the GBP, could decline in value relative to the Japanese yen if there are any indications of escalation.
However, before hiking interest rates once again this year, the Bank of Japan (BoJ) might take an extended break. With the impact of US tariffs predicted to grow in the second half of this year, BoJ Governor Kazuo Ueda stated on Tuesday that the central bank's short-term focus was on downside risks to Japan's economy, implying that the BoJ was not in a rush to start raising interest rates. The US trade policy uncertainties and the BoJ's dovish comments could hurt the Japanese yen (JPY) and lessen the losses in the GBP/JPY exchange rate.
In light of the Israel-Iran crisis and tariff uncertainties, the BoE is anticipated to hold interest rates steady on Thursday.
The JPY may suffer from less wagers on this year's BoJ rate rises.
In the early hours of Thursday's European trading session, the GBP/JPY cross continues to decline, closing in on 194.45. The prospect of a wider Middle East conflict and potential US involvement causes the value of the pound sterling (GBP) to decline against the Japanese yen (JPY). Later on Thursday, investors will be watching the Bank of England's (BoE) interest rate announcement.
At Thursday's June meeting, the BoE is expected to maintain interest rates at 4.25%. According to a Reuters survey, almost all 60 respondents anticipated a further rate decrease to 3.75% in the last three months of 2025, and nearly all of them anticipated the next quarter-point rate cut to occur in August. Given that the war between Israel and Iran has the potential to raise oil prices, policymakers will be keenly watching the effects of Middle East geopolitical tensions.
"More economic uncertainty is being brought on by the ongoing Middle East conflicts. Monica George Michail, an associate economist at the National Institute of Economic and Social Research, stated, "Therefore, we anticipate the Bank of England to maintain rates on hold this Thursday and make only one additional decrease this year." The riskier assets, such as the GBP, could decline in value relative to the Japanese yen if there are any indications of escalation.
However, before hiking interest rates once again this year, the Bank of Japan (BoJ) might take an extended break. With the impact of US tariffs predicted to grow in the second half of this year, BoJ Governor Kazuo Ueda stated on Tuesday that the central bank's short-term focus was on downside risks to Japan's economy, implying that the BoJ was not in a rush to start raising interest rates. The US trade policy uncertainties and the BoJ's dovish comments could hurt the Japanese yen (JPY) and lessen the losses in the GBP/JPY exchange rate.
