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- On Tuesday, the GBP/JPY pair trades with a slight bearish bias at 190.30.
- The Japanese Yen (JPY) gains due to the Middle East’s increasing geopolitical tensions and the vocal intervention of the country’s finance minister.
- Markets are correct to anticipate many interest rate reductions this year, according to BoE’s Bailey.
On Tuesday, the GBP/JPY pair trades with a slight bearish bias at 190.30.
The Japanese Yen (JPY) gains due to the Middle East’s increasing geopolitical tensions and the vocal intervention of the country’s finance minister. Markets are correct to anticipate many interest rate reductions this year, according to BoE’s Bailey.
During Tuesday’s early European session, the GBP/JPY cross trades in negative territory for the sixth consecutive day, close to 190.30. The Japanese Yen (JPY) is temporarily supported to some extent by the verbal involvement of the Japanese authorities.
Shunichi Suzuki, the finance minister of Japan, stated on Tuesday that he will closely monitor foreign exchange (FX) movements and that he will not rule out taking action in response to chaotic movements. The verbal intervention may limit the upside for the GBP/JPY cross and boost the JPY in the short run.
In addition, on Monday, Iranian consular buildings in Damascus, Syria, came under bombardment by jets. With the deaths of some of the Revolutionary Guard’s most senior members, the conflict, which has been going on for more than six months, escalated. The Middle East’s continued geopolitical unrest could support safe-haven assets like the Japanese yen even more.
However, the Bank of England‘s (BoE) dovish position affects the value of the pound sterling (GBP). Governor Andrew Bailey of the Bank of England gave the market a heads-up that interest rate cuts are likely this year, expressing growing confidence that inflation will approach the central bank’s objective. Any more dovish remarks from the BoE representative are probably going to put selling pressure on the pound and make the GBP/JPY pair more difficult to trade.
