GBP/JPY Bounces From Two-Day Low on Hawkish BoJ Expectations
The GBP/JPY currency pair rebounded on Friday from its two-day low of 210.00, reaching as high as 211.80 in early European trading.
This recovery came despite concerns over Japan's fiscal position and the expected hawkish stance from the Bank of Japan.
Japan's initial general-account budget requests are estimated to reach about ¥143 trillion (around $894 billion), setting a record high for the fourth consecutive year, which has fueled skepticism about Prime Minister Sanae Takaichi's capacity to maintain fiscal discipline while pursuing an expansive investment agenda.
The wide rate differential between Japan and other major economies continues to support the JPY-funded carry trade, limiting broader Yen strength.
GBP/JPY also received additional buying interest due to ongoing GBP buying, but reduced expectations for a September BoE rate hike limited further upside.