

Market Analysis
The GBP/JPY pair found some support near the 191.70 level on Friday, pausing its sharp pullback from an overnight one-week high beyond the 195.00 psychological mark. Despite this, the cross remains in negative territory for the second consecutive day, currently trading slightly below the mid-192.00s, down around 0.25% for the day.
The British Pound (GBP) remains pressured by dovish remarks from Bank of England (BoE) Governor Andrew Bailey, who indicated the central bank could take a more aggressive stance on cutting rates if inflation data continues to improve. Additionally, geopolitical tensions from ongoing Middle Eastern conflicts have fueled safe-haven demand for the Japanese Yen (JPY), further weighing on the GBP/JPY pair.
On the other hand, Asahi Noguchi, a dovish member of the Bank of Japan (BoJ) board, stated on Thursday that while the central bank has room to raise rates, it must proceed cautiously to avoid negatively impacting the economy. This has provided some support for the JPY, though uncertainty surrounding future BoJ rate hikes limits further downside for GBP/JPY. Japan's new Prime Minister, Shigeru Ishiba, also mentioned this week that the country is not currently in a position to justify additional rate increases.
Moreover, Japan's Economy Minister, Ryosei Akazawa, emphasized that both the Prime Minister and the BoJ agree that overcoming deflation remains Japan's top priority. Meanwhile, BoE's Chief Economist Huw Pill remarked on Friday that it is crucial to avoid cutting rates either too deeply or too quickly. This has helped the GBP/JPY recover by around 70-80 pips from the daily low, though the absence of strong buying momentum suggests cautious optimism for bullish traders.
Paraphrasing text from "FX Street" all rights reserved by the original author.