GBP Finds Support vs JPY Amid Japan's Economic Woes

The British Pound (GBP) has found support near its weekly low against the Japanese Yen (JPY), but it lacks conviction in its buying. The JPY continues to struggle due to Japan's economic woes and a wide interest rate gap with other major economies.

Japan's national debt and new spending plans have raised concerns about the country's fiscal position, weighing on the JPY. Meanwhile, the Bank of England (BoE) has maintained its benchmark rate at 3.75%, creating a sizeable difference of around 275 basis points with the Bank of Japan's (BoJ) short-term policy rate of 1.00%.

Scotiabank strategists highlight that the upcoming BoJ meeting is priced for about 20bps of tightening, offering some scope for additional near-term strength in the JPY. However, they caution that the central bank's tone may prove more market-sensitive than the modest adjustment already anticipated.