GBP/JPY Stuck in Neutral Ahead of BoE and BoJ Decisions
The GBP/JPY pair is trading on a narrow range as traders await key central bank decisions. The Bank of England (BoE) will announce its policy decision on Thursday, while the Bank of Japan (BoJ) follows suit on Friday. Analysts expect the BoE to keep interest rates unchanged at 3.75% for the sixth consecutive meeting.
The attention will be on the vote split after policymakers voted 6-3 in favor of a 25-basis-point hike last time around. A more hawkish vote could boost the British Pound (GBP), but high energy prices linked to the Middle East conflict continue to cloud the inflation outlook, leaving room for rate increases in coming months.
On the other hand, traders are confident that the BoJ will raise interest rates for the second time this year, taking the policy rate to 1.25%. Expectations of accelerated tightening drove sharp gains in the Japanese Yen at the start of September.
The GBP/JPY pair has declined around 3.50% so far this month and could face fresh selling pressure if the BoJ signals additional hikes may come at a faster pace, while a cautious policy outlook could allow it to recover some losses.