- GBP/JPY attracts fresh buyers on Monday amid a combination of supporting factors.
- The upbeat market mood undermines the safe-haven JPY amid the BoJ uncertainty.
- The GBP benefits from last week’s upbeat UK GDP and further supports spot prices.
The GBP/JPY cross regains positive traction at the start of a new week and climbs back closer to the 200.00 psychological mark during the Asian session. Moreover, spot prices remain close to an over one-year high touched last week and could appreciate further amid a combination of supporting factors.
The high-stakes meeting between US President Donald Trump and Russian leader Vladimir Putin in Alaska yielded no clear breakthrough, though investors remain hopeful about the chances of ending the prolonged war in Ukraine. This further boosts investors’ appetite and undermines the safe-haven Japanese Yen (JPY). The British Pound (GBP), on the other hand, continues to draw support from last week’s upbeat UK GDP print, which turns out to be another factor acting as a tailwind for the GBP/JPY cross.
Data released last Thursday showed that the UK economy expanded at a quarterly rate of 0.3% in the three months to June 2025. This marked a notable deceleration from a 0.7% growth in the first quarter, though it was well above the market forecast of 0.1%. This, in turn, forced traders to push back their expectations for the next rate cut by the Bank of England (BoE) to November. This, however, still marks a significant divergence in comparison to bets for an imminent rate hike by the Bank of Japan (BoJ) later this year.
In fact, data released last Friday showed that Japan’s economy expanded more than expected in the second quarter despite US tariff headwinds. This, along with an upward revision of the BoJ’s inflation forecast, reaffirmed market speculations that the BoJ will stick to its policy normalization path despite domestic political uncertainty. Hence, it will be prudent to wait for strong follow-through buying before positioning for an extension of the GBP/JPY pair’s well-established uptrend witnessed over the past two weeks or so.
