Pound Plunges as BoJ Hawkish Stance Sends Yen Soaring

The Japanese Yen (JPY) has strengthened sharply against major currencies for the second consecutive day, sending the Pound Sterling (GBP) to a one-month low. The GBP/JPY cross fell by 1.60% at the time of writing, trading near 210.60.

This sharp decline comes as investors speculate about another round of intervention or a rate check by Japanese authorities. Top currency diplomat Atsushi Mimura said that officials 'continue to stand ready on forex,' but declined to comment on whether a rate check had been conducted.

The Bank of Japan (BoJ) is expected to adopt a more hawkish monetary policy stance, which has improved sentiment towards the Yen. BoJ board member Hajime Takata called for 'a more nimble approach with rate hikes' and suggested considering 'a broad range of options, not just a 0.25% rate hike each time.'

Strategists at Societe General believe that the Yen may be about to turn a corner due to potential rate hikes and bond repatriation flows. However, they caution that conviction will depend on what the Fed does next.