GBP/JPY Suffers Steep Decline as BoJ Hawkish Sentiment Supports Yen

The Japanese Yen has surged for a second consecutive day, pushing the Pound Sterling to its lowest level in a month. The GBP/JPY cross fell 1.13% on Wednesday and is down around 1.60% at the time of writing, trading near 210.60.

The rally in the Yen has been driven by speculation over another round of intervention or a rate check, as well as expectations that the Bank of Japan could adopt a more hawkish monetary policy stance.

Societe General strategists argue that the BoJ's potential shift towards faster tightening and bond repatriation flows ahead of the end of the fiscal year may be supporting the Yen. However, they caution that conviction in the move will depend on what the Federal Reserve does next and whether bond spreads can back up the rise in spot.