Pound Falters Against Yen as Tokyo CPI Defies Expectations

The British Pound's recovery against the Japanese Yen hit a roadblock on Friday after Tokyo's Consumer Price Index (CPI) data was released, showing a stronger-than-expected reading of 1.9% year-on-year.

This came as the Bank of Japan maintained its hawkish monetary policy stance by keeping interest rates unchanged at 1%, but hinting at 'some upside risks' regarding inflation.

The Japanese Yen's strength was also buoyed by Tokyo's Ministry of Finance intervening in the foreign exchange market to support the domestic currency, following a significant decline the previous day.

Despite this, analysts doubt that the Yen's strength will be long-lasting, with Commerzbank noting that 'the stage was set' for Japan's policy decisions and that the intervention may not be enough to prevent the JPY from trading weaker again in coming days and weeks.