GBP/JPY clings to mild losses below 190.50 amid BoJ’s intervention fears
- GBP/JPY trades with a mild negative bias around 190.30 on Tuesday.
- The verbal intervention from the Japanese Finance Minister and rising Middle East geopolitical tensions lift the Japanese Yen (JPY).
- BoE’s Bailey signaled markets are right to expect more than one interest rate cut this year.
The GBP/JPY cross trades in negative territory for the fifth straight day near 190.30 on Tuesday during the early European session. The verbal intervention from the Japanese authorities provides some support to the Japanese Yen (JPY) for the time being.
Japanese Finance Minister Shunichi Suzuki said on Tuesday that he will not rule out any steps to respond to disorderly moves and that he will monitor foreign exchange (FX) moves with a high sense of urgency. The verbal intervention might lift the JPY in the near term and cap the upside for the GBP/JPY cross.
Additionally, warplanes attacked a building inside Iran's consulate complex in Damascus, Syria, on Monday. Some of the most senior members of Iran's Revolutionary Guard were killed, marking an escalation in the confrontation that has lasted over half a year. The ongoing geopolitical tensions in the Middle East might further boost safe-haven assets like JPY.
On the other hand, the dovish stance of the Bank of England (BoE) weighs on the Pound Sterling (GBP). The BoE Governor Andrew Bailey signaled markets are right to expect more than one interest rate cut this year, saying he is increasingly confident inflation is heading towards the central bank’s target. Any further dovish comments from the BoE official are likely to exert selling pressure on the GBP and create a headwind for the GBP/JPY pair.