GBP/JPY Surges as BoJ Hikes Rates to 31-Year High

The British Pound surged against the Japanese Yen on Friday after the Bank of Japan raised interest rates to a 31-year high. The BoJ hiked short-term interest rates by 25 basis points (bps) to 1.25%, as widely expected, following its September policy meeting.

While the move was anticipated, the accompanying policy statement reiterated that the BoJ will continue raising rates in response to developments in activity, prices, and financial conditions.

The BoE's dovish decision on Thursday may have capped the Pound's gains, but it was unable to offset the positive impact of the BoJ's rate hike. The Japanese Yen has been struggling due to Japan's headline Consumer Price Index (CPI) holding steady at 1.9% YoY and core inflation unexpectedly falling to 1.7% in August.

The GBP/JPY cross jumped to a nearly two-week high, beyond 209.50, as the Pound benefited from subdued US Dollar price action and provided an additional boost to the cross.