GBP/JPY Tumbles to YTD Low as BoJ Rate Hike Bets Rise

The GBP/JPY cross has been under pressure for the second straight day and has dropped to its year-to-date low of around 207.00 on Tuesday, but spot prices have trimmed some of their losses to trade in the mid-208.00s.

This comes as the Japanese Yen (JPY) continues to outperform other major currencies, with traders unwinding short positions ahead of a potential interest-rate hike by the Bank of Japan (BoJ) on September 17-18.

Data released earlier in the day showed that Japan's real wages rose for the seventh consecutive month and the economy expanded at a faster pace than originally estimated, which has boosted bets of a BoJ rate hike and subsequently supported the JPY.

Some analysts even see the risk of a jumbo hike to anchor rising inflation expectations, cap long-end yields and ultimately support the JPY, with traders pricing in the possibility of a potential follow-up move in December.