GBP/JPY Slumps to New YTD Low as BoJ Rate Hike Expectations Mount

The GBP/JPY cross continued its downward trend, hitting a fresh year-to-date low of 207.00 on Tuesday before recovering to the mid-208.00s.

This decline has now seen losses in four of the past five trading days, with the pair staying lower by 0.25% on the day.

The Japanese Yen's strength is being driven by rising expectations of a Bank of Japan interest rate increase, reinforced by data showing real wages rose for the seventh straight month and economic growth was faster than previously estimated.

This backdrop supports the case for a BoJ rate hike at the policy meeting scheduled for September 17-18, with some analysts highlighting the possibility of a larger-than-usual hike aimed at anchoring inflation expectations and containing long-dated yields.