GBP/JPY Bounces Off One-Month Low as BoJ Hike Expectations Mount
The British Pound (GBP) staged a recovery on Friday, rebounding from a one-month low against the Japanese Yen (JPY). The GBP/JPY cross climbed to the 211.80 area during the early European session, snapping a two-day losing streak.
The move came as investors priced in a more hawkish Bank of Japan (BoJ), with concerns over Japan's worsening fiscal conditions prompting some selling around the JPY. The country's initial general-account budget requests are estimated to total ¥143 trillion ($894 billion), a record high for the fourth consecutive year.
Despite expectations for faster BoJ policy tightening, borrowing costs in Japan will remain lower than in other major economies, keeping the 'JPY carry trade' active. The GBP, on the other hand, attracted some follow-through buying and supported the cross.