GBP/JPY surges to near 193.00 after BoE’s monetary policy announcement

GBP/JPY rallies to near 193.00 as the BoE retains a gradual and cautious easing path after cutting interest rates by 25 bps to 4.25%.
Two BoE MPC members favored leaving interest rates steady at 4.5%.
Bloating risks to Japan’s economy have diminished BoJ hawkish expectations in the near term.

The GBP/JPY pair extends its intraday upside move to near 193.00 during the late European session after the announcement of the monetary policy by the Bank of England (BoE). The BoE lowered its interest rates by 25 basis points (bps) to 4.25%, as expected, for the fourth time in its current policy-easing cycle.

Theoretically, lower interest rates by the BoE bode poorly for the Pound Sterling (GBP). However, the British currency has strengthened as a few officials voted for leaving borrowing rates at 4.5%. Additionally, the BoE has maintained a “gradual and careful” approach to further monetary expansion and raised its Gross Domestic Product (GDP) forecast for the current year to 1% from 0.75% projected in February.

BoE Monetary Policy Committee (MPC) members Catherine Mann and Chief Economist Huw Pill favored leaving interest rates at 4.5%. Meanwhile, officials Swati Dhingra and Alan Taylor voted for a larger-than-usual interest rate cut of 50 bps.

Meanwhile, investors brace of more volatility in the Pound Sterling as United States (US) President Donald Trump is scheduled to announce a trade deal with the United Kingdom (UK) at 14:00 GMT, which what he referred as “highly respected country” in a post on Truth.Social on Wednesday. A report from “The New York Times” showed that the country is the UK.

On the Tokyo front, the Japanese Yen (JPY) underperforms across the board as investors doubt that the Bank of Japan (BoJ) will hike interest rates in the near term, given the US President Trump-led trade war risk.

Japanese Yen PRICE Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.05%	-0.29%	0.59%	0.36%	0.12%	0.24%	0.21%
EUR	-0.05%		-0.33%	0.54%	0.28%	0.07%	0.20%	0.16%
GBP	0.29%	0.33%		0.89%	0.62%	0.42%	0.53%	0.46%
JPY	-0.59%	-0.54%	-0.89%		-0.25%	-0.47%	-0.36%	-0.43%
CAD	-0.36%	-0.28%	-0.62%	0.25%		-0.23%	-0.11%	-0.19%
AUD	-0.12%	-0.07%	-0.42%	0.47%	0.23%		0.13%	0.06%
NZD	-0.24%	-0.20%	-0.53%	0.36%	0.11%	-0.13%		-0.07%
CHF	-0.21%	-0.16%	-0.46%	0.43%	0.19%	-0.06%	0.07%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

The BoJ minutes of the March meeting in which the central bank left interest rates steady at 0.5% showed that officials warned of downside risks to the domestic economy, prompted by the US international policies. “Downside risks stemming from US policies had rapidly heightened and, depending on future developments in its tariff policy, it was quite possible that these risks would even have a significant negative impact on Japan’s real economy,” one BoJ member said, Reuters reported.

Economic Indicator

BoE Interest Rate Decision

The Bank of England (BoE) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoE is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Pound Sterling (GBP). Likewise, if the BoE adopts a dovish view on the UK economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for GBP.