GBP/JPY Edges Higher as Yen Weakness Persists

The Japanese Yen (JPY) continues to weaken against major currencies, including the British Pound (GBP), due in part to the Bank of Japan's (BoJ) decision to raise its policy rate by 25 basis points (bps) to 1.25%. Despite this move being viewed as dovish by traders, the Yen has fallen sharply since Friday.

Japanese markets are closed until Wednesday for Silver Week holidays, contributing to thin trading conditions that have allowed the cross to edge higher on Monday. The GBP/JPY trades around 210.55, extending gains for a second straight day.

The Bank of England's (BoE) decision to keep interest rates unchanged at 3.75% last week weighed on the British Pound, but persistent Yen weakness is keeping GBP/JPY supported. A wide interest-rate gap and elevated Oil prices amid war in the Middle East continue to weigh on the Yen.

Looking ahead, preliminary Purchasing Managers' Index (PMI) data from the United Kingdom (UK) and Japan will be closely watched for fresh signs of economic activity. Traders will also watch speeches from BoE officials for more clues about the interest-rate outlook.