GBP/JPY Slides Ahead of BoE Decision Amid Fiscal Concerns

The British Pound has weakened against the Japanese Yen on Monday, as traders trim their exposure ahead of the Bank of England's (BoE) interest-rate decision on Thursday. The GBP/JPY cross is trading around 217.84, down 0.23% on the day.

Sterling faces pressure from lower UK government bond yields and a decline in Oil prices. However, concerns over the UK's fiscal outlook also weigh on the Pound, with Prime Minister Andy Burnham signalling plans for higher spending that could require additional borrowing or tax increases.

According to ING analyst Francesco Pesole, if inflation remains contained, the BoE will likely leave rates unchanged for the rest of the year. Markets are currently pricing 38bp of tightening by year-end, and a dovish repricing is seen as the clearest near-term risk for sterling.