GBP Loses Ground Against JPY Ahead of BoE Decision

The British Pound (GBP) has lost ground against the Japanese Yen (JPY) in recent trading, as investors trim their exposure ahead of the Bank of England's (BoE) interest-rate decision on Thursday.

According to ING analyst Francesco Pesole, if inflation is still expected to remain contained, the BoE will leave rates unchanged for the rest of the year. Markets are pricing 38bp of tightening by year-end, which would be a dovish repricing and the clearest near-term risk for sterling.

The decline in oil prices has eased concerns about near-term inflation, but Pesole noted that upside risks to inflation have not disappeared. The BoE is widely expected to leave its benchmark interest rate unchanged at 3.75%.