- GBP/JPY gains traction to near 195.60 in Tuesday’s early European session.
- BoJ members saw scope to hike rates if the economy and prices move in line with the forecast, June minutes showed.
- The BoE is expected to cut interest rates at its August meeting on Thursday.
The GBP/JPY cross attracts some buyers to around 195.60 during the early European trading hours on Tuesday. The Japanese Yen (JPY) edges lower against the Pound Sterling (GBP) amid risk-on sentiment and political uncertainty in Japan. Traders await the Bank of England (BoE) monetary policy decision on Thursday for fresh impetus.
According to the minutes of the June Bank of Japan (BoJ) monetary policy meeting released on Tuesday, some policymakers saw scope to resume interest rate increases once trade friction caused by US tariffs eased. The minutes emphasized that most BoJ members supported keeping interest rates unchanged for the time being amid heightened uncertainty over US trade tariffs.
Hawkish June BoJ meeting Minutes reaffirmed rate hike bets and might provide some support to the JPY. However, domestic political instability might cap the upside for JPY after the ruling Liberal Democratic Party’s loss in the July 20 polls.
The BoE is widely anticipated to cut its key interest rate to 4.0% from 4.25% on Thursday amid rising unemployment in the UK economy and the hit to global trade from US tariffs. Financial markets have priced in more than 80% odds of BoE rate cuts at the August meeting and are penciling in a further quarter-point reduction before the end of the year.
